Correlation Between State Bank and STMICROELECTRONICS
Can any of the company-specific risk be diversified away by investing in both State Bank and STMICROELECTRONICS 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 State Bank and STMICROELECTRONICS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between State Bank of and STMICROELECTRONICS, you can compare the effects of market volatilities on State Bank and STMICROELECTRONICS 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 State Bank with a short position of STMICROELECTRONICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Bank and STMICROELECTRONICS.
Diversification Opportunities for State Bank and STMICROELECTRONICS
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between State and STMICROELECTRONICS is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of and STMICROELECTRONICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMICROELECTRONICS and State Bank 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 State Bank of are associated (or correlated) with STMICROELECTRONICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STMICROELECTRONICS has no effect on the direction of State Bank i.e., State Bank and STMICROELECTRONICS go up and down completely randomly.
Pair Corralation between State Bank and STMICROELECTRONICS
Assuming the 90 days horizon State Bank of is expected to generate 0.97 times more return on investment than STMICROELECTRONICS. However, State Bank of is 1.03 times less risky than STMICROELECTRONICS. It trades about 0.09 of its potential returns per unit of risk. STMICROELECTRONICS is currently generating about -0.16 per unit of risk. If you would invest 9,050 in State Bank of on August 31, 2024 and sell it today you would earn a total of 350.00 from holding State Bank of or generate 3.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Bank of vs. STMICROELECTRONICS
Performance |
| Timeline |
| State Bank |
| STMICROELECTRONICS |
State Bank and STMICROELECTRONICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Bank and STMICROELECTRONICS
The main advantage of trading using opposite State Bank and STMICROELECTRONICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Bank position performs unexpectedly, STMICROELECTRONICS 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 STMICROELECTRONICS will offset losses from the drop in STMICROELECTRONICS's long position.| State Bank vs. Hyrican Informationssysteme Aktiengesellschaft | State Bank vs. Major Drilling Group | State Bank vs. ELMOS SEMICONDUCTOR | State Bank vs. Magnachip Semiconductor |
| STMICROELECTRONICS vs. SIVERS SEMICONDUCTORS AB | STMICROELECTRONICS vs. Darden Restaurants | STMICROELECTRONICS vs. Reliance Steel Aluminum | STMICROELECTRONICS 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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