Correlation Between STMicroelectronics and STOMO MITSUI
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and STOMO MITSUI at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining STMicroelectronics and STOMO MITSUI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV and STOMO MITSUI FINL, you can compare the effects of market volatilities on STMicroelectronics and STOMO MITSUI and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in STMicroelectronics with a short position of STOMO MITSUI. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and STOMO MITSUI.
Diversification Opportunities for STMicroelectronics and STOMO MITSUI
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between STMicroelectronics and STOMO is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and STOMO MITSUI FINL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STOMO MITSUI FINL and STMicroelectronics is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on STMicroelectronics NV are associated (or correlated) with STOMO MITSUI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STOMO MITSUI FINL has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and STOMO MITSUI go up and down completely randomly.
Pair Corralation between STMicroelectronics and STOMO MITSUI
Assuming the 90 days horizon STMicroelectronics NV is expected to generate 1.12 times more return on investment than STOMO MITSUI. However, STMicroelectronics is 1.12 times more volatile than STOMO MITSUI FINL. It trades about 0.01 of its potential returns per unit of risk. STOMO MITSUI FINL is currently generating about -0.19 per unit of risk. If you would invest 2,420 in STMicroelectronics NV on October 1, 2024 and sell it today you would earn a total of 0.00 from holding STMicroelectronics NV or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
STMicroelectronics NV vs. STOMO MITSUI FINL
Performance |
| Timeline |
| STMicroelectronics |
| STOMO MITSUI FINL |
STMicroelectronics and STOMO MITSUI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMicroelectronics and STOMO MITSUI
The main advantage of trading using opposite STMicroelectronics and STOMO MITSUI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics position performs unexpectedly, STOMO MITSUI can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in STOMO MITSUI will offset losses from the drop in STOMO MITSUI's long position.| STMicroelectronics vs. Commonwealth Bank of | STMicroelectronics vs. Consolidated Communications Holdings | STMicroelectronics vs. REVO INSURANCE SPA | STMicroelectronics vs. COMINTL BANK ADR1 |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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