Correlation Between STMicroelectronics and Crixus Bh3

Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and Crixus Bh3 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 Crixus Bh3 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between STMicroelectronics NV ADR and Crixus Bh3 Acquisition, you can compare the effects of market volatilities on STMicroelectronics and Crixus Bh3 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 Crixus Bh3. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and Crixus Bh3.

Diversification Opportunities for STMicroelectronics and Crixus Bh3

0.48

Correlation Coefficient

STMicroelectronics  Crixus Bh3

Very weak diversification

The 3 months correlation between STMicroelectronics and Crixus is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV ADR and Crixus Bh3 Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crixus Bh3 Acquisition 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 NV ADR are associated (or correlated) with Crixus Bh3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crixus Bh3 Acquisition has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and Crixus Bh3 go up and down completely randomly.

Pair Corralation between STMicroelectronics and Crixus Bh3

Considering the 90-day investment horizon STMicroelectronics NV ADR is expected to under-perform the Crixus Bh3. In addition to that, STMicroelectronics is 5.09 times more volatile than Crixus Bh3 Acquisition. It trades about -0.03 of its total potential returns per unit of risk. Crixus Bh3 Acquisition is currently generating about 0.05 per unit of volatility. If you would invest  1,058  in Crixus Bh3 Acquisition on September 14, 2024 and sell it today you would earn a total of  5.00  from holding Crixus Bh3 Acquisition or generate 0.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	39.06%
Values	Daily Returns

STMicroelectronics NV ADR  vs.  Crixus Bh3 Acquisition

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 very healthy basic indicators, STMicroelectronics is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Crixus Bh3 Acquisition

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Crixus Bh3 Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Crixus Bh3 is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with STMicroelectronics and Crixus Bh3

The main advantage of trading using opposite STMicroelectronics and Crixus Bh3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics position performs unexpectedly, Crixus Bh3 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 Crixus Bh3 will offset losses from the drop in Crixus Bh3's long position.

The idea behind STMicroelectronics NV ADR and Crixus Bh3 Acquisition 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.