Correlation Between STMicroelectronics and ATRESMEDIA
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and ATRESMEDIA 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 ATRESMEDIA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV and ATRESMEDIA, you can compare the effects of market volatilities on STMicroelectronics and ATRESMEDIA 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 ATRESMEDIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and ATRESMEDIA.
Diversification Opportunities for STMicroelectronics and ATRESMEDIA
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between STMicroelectronics and ATRESMEDIA is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and ATRESMEDIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATRESMEDIA 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 ATRESMEDIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATRESMEDIA has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and ATRESMEDIA go up and down completely randomly.
Pair Corralation between STMicroelectronics and ATRESMEDIA
Assuming the 90 days horizon STMicroelectronics NV is expected to under-perform the ATRESMEDIA. In addition to that, STMicroelectronics is 2.21 times more volatile than ATRESMEDIA. It trades about -0.11 of its total potential returns per unit of risk. ATRESMEDIA is currently generating about -0.02 per unit of volatility. If you would invest 455.00 in ATRESMEDIA on September 2, 2024 and sell it today you would lose (6.00) from holding ATRESMEDIA or give up 1.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
STMicroelectronics NV vs. ATRESMEDIA
Performance |
| Timeline |
| STMicroelectronics |
| ATRESMEDIA |
STMicroelectronics and ATRESMEDIA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMicroelectronics and ATRESMEDIA
The main advantage of trading using opposite STMicroelectronics and ATRESMEDIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics position performs unexpectedly, ATRESMEDIA 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 ATRESMEDIA will offset losses from the drop in ATRESMEDIA's long position.The idea behind STMicroelectronics NV and ATRESMEDIA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| ATRESMEDIA vs. SIVERS SEMICONDUCTORS AB | ATRESMEDIA vs. Darden Restaurants | ATRESMEDIA vs. Reliance Steel Aluminum | ATRESMEDIA vs. Q2M Managementberatung AG |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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