Correlation Between STMicroelectronics and Technos SA
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and Technos SA 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 Technos SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV and Technos SA, you can compare the effects of market volatilities on STMicroelectronics and Technos SA 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 Technos SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and Technos SA.
Diversification Opportunities for STMicroelectronics and Technos SA
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between STMicroelectronics and Technos is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and Technos SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Technos SA 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 Technos SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Technos SA has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and Technos SA go up and down completely randomly.
Pair Corralation between STMicroelectronics and Technos SA
Assuming the 90 days trading horizon STMicroelectronics NV is expected to under-perform the Technos SA. But the stock apears to be less risky and, when comparing its historical volatility, STMicroelectronics NV is 1.8 times less risky than Technos SA. The stock trades about -0.18 of its potential returns per unit of risk. The Technos SA is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 525.00 in Technos SA on September 2, 2024 and sell it today you would earn a total of 65.00 from holding Technos SA or generate 12.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
STMicroelectronics NV vs. Technos SA
Performance |
| Timeline |
| STMicroelectronics |
| Technos SA |
STMicroelectronics and Technos SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMicroelectronics and Technos SA
The main advantage of trading using opposite STMicroelectronics and Technos SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics position performs unexpectedly, Technos SA 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 Technos SA will offset losses from the drop in Technos SA's long position.| STMicroelectronics vs. Zoom Video Communications | STMicroelectronics vs. Apartment Investment and | STMicroelectronics vs. Charter Communications | STMicroelectronics vs. Telecomunicaes Brasileiras SA |
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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