Correlation Between Lexibook Linguistic and STMicroelectronics

Can any of the company-specific risk be diversified away by investing in both Lexibook Linguistic 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 Lexibook Linguistic and STMicroelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lexibook Linguistic Electronic and STMicroelectronics NV, you can compare the effects of market volatilities on Lexibook Linguistic 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 Lexibook Linguistic with a short position of STMicroelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lexibook Linguistic and STMicroelectronics.

Diversification Opportunities for Lexibook Linguistic and STMicroelectronics

-0.32

Correlation Coefficient

Lexibook Linguistic  STMicroelectronics

Very good diversification

The 3 months correlation between Lexibook and STMicroelectronics is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Lexibook Linguistic Electronic and STMicroelectronics NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMicroelectronics and Lexibook Linguistic 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 Lexibook Linguistic Electronic 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 Lexibook Linguistic i.e., Lexibook Linguistic and STMicroelectronics go up and down completely randomly.

Pair Corralation between Lexibook Linguistic and STMicroelectronics

Assuming the 90 days trading horizon Lexibook Linguistic Electronic is expected to generate 1.19 times more return on investment than STMicroelectronics. However, Lexibook Linguistic is 1.19 times more volatile than STMicroelectronics NV. It trades about 0.12 of its potential returns per unit of risk. STMicroelectronics NV is currently generating about -0.06 per unit of risk. If you would invest  398.00  in Lexibook Linguistic Electronic on December 29, 2024 and sell it today you would earn a total of  108.00  from holding Lexibook Linguistic Electronic or generate 27.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Lexibook Linguistic Electronic  vs.  STMicroelectronics NV

Lexibook Linguistic

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lexibook Linguistic Electronic are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Lexibook Linguistic reported solid returns over the last few months and may actually be approaching a breakup point.

STMicroelectronics

Risk-Adjusted Performance

Very Weak

Over the last 90 days STMicroelectronics NV has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Lexibook Linguistic and STMicroelectronics

The main advantage of trading using opposite Lexibook Linguistic and STMicroelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lexibook Linguistic 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.

The idea behind Lexibook Linguistic Electronic and STMicroelectronics NV pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.