Correlation Between STMICROELECTRONICS and Paychex

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both STMICROELECTRONICS and Paychex 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 STMICROELECTRONICS and Paychex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMICROELECTRONICS and Paychex, you can compare the effects of market volatilities on STMICROELECTRONICS and Paychex 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 STMICROELECTRONICS with a short position of Paychex. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMICROELECTRONICS and Paychex.

Diversification Opportunities for STMICROELECTRONICS and Paychex

STMICROELECTRONICSPaychexDiversified AwaySTMICROELECTRONICSPaychexDiversified Away100%
-0.56
  Correlation Coefficient

Excellent diversification

The 3 months correlation between STMICROELECTRONICS and Paychex is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding STMICROELECTRONICS and Paychex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paychex and STMICROELECTRONICS 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 STMICROELECTRONICS are associated (or correlated) with Paychex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paychex has no effect on the direction of STMICROELECTRONICS i.e., STMICROELECTRONICS and Paychex go up and down completely randomly.

Pair Corralation between STMICROELECTRONICS and Paychex

Assuming the 90 days trading horizon STMICROELECTRONICS is expected to under-perform the Paychex. In addition to that, STMICROELECTRONICS is 1.43 times more volatile than Paychex. It trades about -0.01 of its total potential returns per unit of risk. Paychex is currently generating about 0.12 per unit of volatility. If you would invest  12,161  in Paychex on September 15, 2024 and sell it today you would earn a total of  1,241  from holding Paychex or generate 10.2% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

STMICROELECTRONICS  vs.  Paychex

 Performance 
JavaScript chart by amCharts 3.21.15OctNov -5051015
JavaScript chart by amCharts 3.21.15SGM PCX
       Timeline  
STMICROELECTRONICS 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days STMICROELECTRONICS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, STMICROELECTRONICS is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec23.52424.52525.52626.527
Paychex 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Paychex are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Paychex may actually be approaching a critical reversion point that can send shares even higher in January 2025.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec120125130135140

STMICROELECTRONICS and Paychex Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-6.2-4.64-3.09-1.530.01.493.054.626.187.75 0.050.100.150.20
JavaScript chart by amCharts 3.21.15SGM PCX
       Returns  

Pair Trading with STMICROELECTRONICS and Paychex

The main advantage of trading using opposite STMICROELECTRONICS and Paychex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMICROELECTRONICS position performs unexpectedly, Paychex 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 Paychex will offset losses from the drop in Paychex's long position.
The idea behind STMICROELECTRONICS and Paychex 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.
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

Other Complementary Tools

Portfolio File Import
Quickly import all of your third-party portfolios from your local drive in csv format
Portfolio Holdings
Check your current holdings and cash postion to detemine if your portfolio needs rebalancing
Companies Directory
Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals
Portfolio Comparator
Compare the composition, asset allocations and performance of any two portfolios in your account
Aroon Oscillator
Analyze current equity momentum using Aroon Oscillator and other momentum ratios