Correlation Between THRACE PLASTICS and STMicroelectronics
Can any of the company-specific risk be diversified away by investing in both THRACE PLASTICS 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 THRACE PLASTICS and STMicroelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between THRACE PLASTICS and STMicroelectronics NV, you can compare the effects of market volatilities on THRACE PLASTICS 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 THRACE PLASTICS with a short position of STMicroelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of THRACE PLASTICS and STMicroelectronics.
Diversification Opportunities for THRACE PLASTICS and STMicroelectronics
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between THRACE and STMicroelectronics is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding THRACE PLASTICS and STMicroelectronics NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMicroelectronics and THRACE PLASTICS 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 THRACE PLASTICS 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 THRACE PLASTICS i.e., THRACE PLASTICS and STMicroelectronics go up and down completely randomly.
Pair Corralation between THRACE PLASTICS and STMicroelectronics
Assuming the 90 days trading horizon THRACE PLASTICS is expected to generate 0.68 times more return on investment than STMicroelectronics. However, THRACE PLASTICS is 1.47 times less risky than STMicroelectronics. It trades about 0.02 of its potential returns per unit of risk. STMicroelectronics NV is currently generating about -0.02 per unit of risk. If you would invest 374.00 in THRACE PLASTICS on October 11, 2024 and sell it today you would earn a total of 25.00 from holding THRACE PLASTICS or generate 6.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
THRACE PLASTICS vs. STMicroelectronics NV
Performance |
| Timeline |
| THRACE PLASTICS |
| STMicroelectronics |
THRACE PLASTICS and STMicroelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with THRACE PLASTICS and STMicroelectronics
The main advantage of trading using opposite THRACE PLASTICS and STMicroelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if THRACE PLASTICS 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' long position.| THRACE PLASTICS vs. UNITED RENTALS | THRACE PLASTICS vs. Cincinnati Financial Corp | THRACE PLASTICS vs. GRENKELEASING Dusseldorf | THRACE PLASTICS vs. Fukuyama Transporting Co |
| STMicroelectronics vs. TAL Education Group | STMicroelectronics vs. THRACE PLASTICS | STMicroelectronics vs. Summit Materials | STMicroelectronics vs. Heidelberg Materials 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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