Correlation Between STMicroelectronics and Technip Energies
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and Technip Energies 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 Technip Energies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV and Technip Energies BV, you can compare the effects of market volatilities on STMicroelectronics and Technip Energies 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 Technip Energies. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and Technip Energies.
Diversification Opportunities for STMicroelectronics and Technip Energies
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between STMicroelectronics and Technip is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and Technip Energies BV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Technip Energies 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 Technip Energies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Technip Energies has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and Technip Energies go up and down completely randomly.
Pair Corralation between STMicroelectronics and Technip Energies
Assuming the 90 days trading horizon STMicroelectronics NV is expected to under-perform the Technip Energies. In addition to that, STMicroelectronics is 1.01 times more volatile than Technip Energies BV. It trades about -0.05 of its total potential returns per unit of risk. Technip Energies BV is currently generating about 0.05 per unit of volatility. If you would invest 2,284 in Technip Energies BV on September 1, 2024 and sell it today you would earn a total of 42.00 from holding Technip Energies BV or generate 1.84% 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 vs. Technip Energies BV
Performance |
| Timeline |
| STMicroelectronics |
| Technip Energies |
STMicroelectronics and Technip Energies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMicroelectronics and Technip Energies
The main advantage of trading using opposite STMicroelectronics and Technip Energies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics position performs unexpectedly, Technip Energies 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 Technip Energies will offset losses from the drop in Technip Energies' long position.| STMicroelectronics vs. Hotelim Socit Anonyme | STMicroelectronics vs. Sogeclair SA | STMicroelectronics vs. Axway Software | STMicroelectronics vs. Sidetrade |
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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