Correlation Between STMicroelectronics and Payoneer Global

Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and Payoneer Global 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 Payoneer Global 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 Payoneer Global, you can compare the effects of market volatilities on STMicroelectronics and Payoneer Global 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 Payoneer Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and Payoneer Global.

Diversification Opportunities for STMicroelectronics and Payoneer Global

-0.85

Correlation Coefficient

STMicroelectronics  Payoneer Global

Pay attention - limited upside

The 3 months correlation between STMicroelectronics and Payoneer is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV ADR and Payoneer Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payoneer Global 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 Payoneer Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payoneer Global has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and Payoneer Global go up and down completely randomly.

Pair Corralation between STMicroelectronics and Payoneer Global

Considering the 90-day investment horizon STMicroelectronics NV ADR is expected to under-perform the Payoneer Global. But the stock apears to be less risky and, when comparing its historical volatility, STMicroelectronics NV ADR is 1.29 times less risky than Payoneer Global. The stock trades about -0.02 of its potential returns per unit of risk. The Payoneer Global is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  544.00  in Payoneer Global on September 19, 2024 and sell it today you would earn a total of  449.00  from holding Payoneer Global or generate 82.54% return on investment over 90 days.

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

STMicroelectronics NV ADR  vs.  Payoneer Global

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 weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Payoneer Global

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Payoneer Global are ranked lower than 11 (%) 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.

Pair Trading with STMicroelectronics and Payoneer Global

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

The idea behind STMicroelectronics NV ADR and Payoneer Global 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.