Correlation Between Payoneer Global and STMicroelectronics

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

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

Diversification Opportunities for Payoneer Global and STMicroelectronics

-0.85

Correlation Coefficient

Payoneer Global  STMicroelectronics

Pay attention - limited upside

The 3 months correlation between Payoneer and STMicroelectronics is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Payoneer Global 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 Payoneer Global 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 Payoneer Global 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 Payoneer Global i.e., Payoneer Global and STMicroelectronics go up and down completely randomly.

Pair Corralation between Payoneer Global and STMicroelectronics

Given the investment horizon of 90 days Payoneer Global is expected to generate 1.47 times more return on investment than STMicroelectronics. However, Payoneer Global is 1.47 times more volatile than STMicroelectronics NV ADR. It trades about 0.16 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  758.00  in Payoneer Global on September 20, 2024 and sell it today you would earn a total of  248.00  from holding Payoneer Global or generate 32.72% return on investment over 90 days.

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

Payoneer Global  vs.  STMicroelectronics NV ADR

Payoneer Global

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Payoneer Global are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Payoneer Global displayed solid returns over the last few months and may actually be approaching a breakup point.

STMicroelectronics NV ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days STMicroelectronics NV ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Payoneer Global and STMicroelectronics

The main advantage of trading using opposite Payoneer Global and STMicroelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Payoneer Global 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 Payoneer Global and STMicroelectronics NV ADR 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.