Correlation Between Ubisoft Entertainment and STMicroelectronics
Can any of the company-specific risk be diversified away by investing in both Ubisoft Entertainment 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 Ubisoft Entertainment and STMicroelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ubisoft Entertainment SA and STMicroelectronics NV, you can compare the effects of market volatilities on Ubisoft Entertainment 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 Ubisoft Entertainment with a short position of STMicroelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ubisoft Entertainment and STMicroelectronics.
Diversification Opportunities for Ubisoft Entertainment and STMicroelectronics
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ubisoft and STMicroelectronics is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Ubisoft Entertainment SA and STMicroelectronics NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMicroelectronics and Ubisoft Entertainment 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 Ubisoft Entertainment SA 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 Ubisoft Entertainment i.e., Ubisoft Entertainment and STMicroelectronics go up and down completely randomly.
Pair Corralation between Ubisoft Entertainment and STMicroelectronics
Assuming the 90 days horizon Ubisoft Entertainment SA is expected to under-perform the STMicroelectronics. But the stock apears to be less risky and, when comparing its historical volatility, Ubisoft Entertainment SA is 1.33 times less risky than STMicroelectronics. The stock trades about -0.06 of its potential returns per unit of risk. The STMicroelectronics NV is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,523 in STMicroelectronics NV on October 11, 2024 and sell it today you would earn a total of 53.00 from holding STMicroelectronics NV or generate 2.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
Ubisoft Entertainment SA vs. STMicroelectronics NV
Performance |
| Timeline |
| Ubisoft Entertainment |
| STMicroelectronics |
Ubisoft Entertainment and STMicroelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ubisoft Entertainment and STMicroelectronics
The main advantage of trading using opposite Ubisoft Entertainment and STMicroelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ubisoft Entertainment 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.| Ubisoft Entertainment vs. Gaztransport Technigaz SA | Ubisoft Entertainment vs. APPLIED MATERIALS | Ubisoft Entertainment vs. Eagle Materials | Ubisoft Entertainment vs. NTG Nordic Transport |
| 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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