Correlation Between STMicroelectronics and Bd Multimedia
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and Bd Multimedia 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 Bd Multimedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV and Bd Multimedia, you can compare the effects of market volatilities on STMicroelectronics and Bd Multimedia 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 Bd Multimedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and Bd Multimedia.
Diversification Opportunities for STMicroelectronics and Bd Multimedia
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between STMicroelectronics and ALBDM is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and Bd Multimedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bd Multimedia 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 Bd Multimedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bd Multimedia has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and Bd Multimedia go up and down completely randomly.
Pair Corralation between STMicroelectronics and Bd Multimedia
Assuming the 90 days trading horizon STMicroelectronics NV is expected to under-perform the Bd Multimedia. But the stock apears to be less risky and, when comparing its historical volatility, STMicroelectronics NV is 2.24 times less risky than Bd Multimedia. The stock trades about -0.13 of its potential returns per unit of risk. The Bd Multimedia is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 219.00 in Bd Multimedia on August 29, 2024 and sell it today you would lose (91.00) from holding Bd Multimedia or give up 41.55% 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. Bd Multimedia
Performance |
| Timeline |
| STMicroelectronics |
| Bd Multimedia |
STMicroelectronics and Bd Multimedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMicroelectronics and Bd Multimedia
The main advantage of trading using opposite STMicroelectronics and Bd Multimedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics position performs unexpectedly, Bd Multimedia 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 Bd Multimedia will offset losses from the drop in Bd Multimedia's long position.| STMicroelectronics vs. LVMH Mot Hennessy | STMicroelectronics vs. LOreal SA | STMicroelectronics vs. Hermes International SCA | STMicroelectronics vs. Manitou BF SA |
| Bd Multimedia vs. Aubay Socit Anonyme | Bd Multimedia vs. Infotel SA | Bd Multimedia vs. IT Link | Bd Multimedia vs. Manitou BF SA |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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