Correlation Between Cloudcoco Group and STMicroelectronics

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Can any of the company-specific risk be diversified away by investing in both Cloudcoco Group 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 Cloudcoco Group and STMicroelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cloudcoco Group PLC and STMicroelectronics NV, you can compare the effects of market volatilities on Cloudcoco Group 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 Cloudcoco Group with a short position of STMicroelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cloudcoco Group and STMicroelectronics.

Diversification Opportunities for Cloudcoco Group and STMicroelectronics

-0.29
  Correlation Coefficient

Very good diversification

The 3 months correlation between Cloudcoco and STMicroelectronics is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Cloudcoco Group PLC and STMicroelectronics NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMicroelectronics and Cloudcoco Group 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 Cloudcoco Group PLC 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 Cloudcoco Group i.e., Cloudcoco Group and STMicroelectronics go up and down completely randomly.

Pair Corralation between Cloudcoco Group and STMicroelectronics

Assuming the 90 days trading horizon Cloudcoco Group PLC is expected to generate 11.01 times more return on investment than STMicroelectronics. However, Cloudcoco Group is 11.01 times more volatile than STMicroelectronics NV. It trades about 0.07 of its potential returns per unit of risk. STMicroelectronics NV is currently generating about -0.07 per unit of risk. If you would invest  18.00  in Cloudcoco Group PLC on September 3, 2024 and sell it today you would earn a total of  2.00  from holding Cloudcoco Group PLC or generate 11.11% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Cloudcoco Group PLC  vs.  STMicroelectronics NV

 Performance 
       Timeline  
Cloudcoco Group PLC 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Cloudcoco Group PLC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Cloudcoco Group unveiled solid returns over the last few months and may actually be approaching a breakup point.
STMicroelectronics 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days STMicroelectronics NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Cloudcoco Group and STMicroelectronics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cloudcoco Group and STMicroelectronics

The main advantage of trading using opposite Cloudcoco Group and STMicroelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cloudcoco Group 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 Cloudcoco Group PLC 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.

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