Correlation Between Viemed Healthcare and STMicroelectronics
Can any of the company-specific risk be diversified away by investing in both Viemed Healthcare 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 Viemed Healthcare and STMicroelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Viemed Healthcare and STMicroelectronics NV ADR, you can compare the effects of market volatilities on Viemed Healthcare 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 Viemed Healthcare with a short position of STMicroelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Viemed Healthcare and STMicroelectronics.
Diversification Opportunities for Viemed Healthcare and STMicroelectronics
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Viemed and STMicroelectronics is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Viemed Healthcare and STMicroelectronics NV ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMicroelectronics NV ADR and Viemed Healthcare 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 Viemed Healthcare 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 NV ADR has no effect on the direction of Viemed Healthcare i.e., Viemed Healthcare and STMicroelectronics go up and down completely randomly.
Pair Corralation between Viemed Healthcare and STMicroelectronics
Considering the 90-day investment horizon Viemed Healthcare is expected to generate 0.96 times more return on investment than STMicroelectronics. However, Viemed Healthcare is 1.04 times less risky than STMicroelectronics. It trades about 0.03 of its potential returns per unit of risk. STMicroelectronics NV ADR is currently generating about -0.08 per unit of risk. If you would invest 872.00 in Viemed Healthcare on September 13, 2024 and sell it today you would earn a total of 18.00 from holding Viemed Healthcare or generate 2.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.67% |
| Values | Daily Returns |
Viemed Healthcare vs. STMicroelectronics NV ADR
Performance |
| Timeline |
| Viemed Healthcare |
| STMicroelectronics NV ADR |
Viemed Healthcare and STMicroelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Viemed Healthcare and STMicroelectronics
The main advantage of trading using opposite Viemed Healthcare and STMicroelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Viemed Healthcare 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.| Viemed Healthcare vs. Profound Medical Corp | Viemed Healthcare vs. Si Bone | Viemed Healthcare vs. IRIDEX | Viemed Healthcare vs. SurModics |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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