Correlation Between STMicroelectronics and Viemed Healthcare
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and Viemed Healthcare 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 Viemed Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV ADR and Viemed Healthcare, you can compare the effects of market volatilities on STMicroelectronics and Viemed Healthcare 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 Viemed Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and Viemed Healthcare.
Diversification Opportunities for STMicroelectronics and Viemed Healthcare
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between STMicroelectronics and Viemed is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV ADR and Viemed Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viemed Healthcare 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 ADR are associated (or correlated) with Viemed Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viemed Healthcare has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and Viemed Healthcare go up and down completely randomly.
Pair Corralation between STMicroelectronics and Viemed Healthcare
Considering the 90-day investment horizon STMicroelectronics NV ADR is expected to under-perform the Viemed Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, STMicroelectronics NV ADR is 1.15 times less risky than Viemed Healthcare. The stock trades about -0.01 of its potential returns per unit of risk. The Viemed Healthcare is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 759.00 in Viemed Healthcare on September 14, 2024 and sell it today you would earn a total of 109.00 from holding Viemed Healthcare or generate 14.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
STMicroelectronics NV ADR vs. Viemed Healthcare
Performance |
| Timeline |
| STMicroelectronics NV ADR |
| Viemed Healthcare |
STMicroelectronics and Viemed Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMicroelectronics and Viemed Healthcare
The main advantage of trading using opposite STMicroelectronics and Viemed Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics position performs unexpectedly, Viemed Healthcare 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 Viemed Healthcare will offset losses from the drop in Viemed Healthcare's long position.| STMicroelectronics vs. NXP Semiconductors NV | STMicroelectronics vs. Analog Devices | STMicroelectronics vs. ON Semiconductor | STMicroelectronics vs. Lattice Semiconductor |
| Viemed Healthcare vs. Avita Medical | Viemed Healthcare vs. Sight Sciences | Viemed Healthcare vs. Treace Medical Concepts | Viemed Healthcare vs. Neuropace |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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