Correlation Between STMicroelectronics and Pure Storage,

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

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

Diversification Opportunities for STMicroelectronics and Pure Storage,

0.1

Correlation Coefficient

STMicroelectronics  Pure Storage,

Average diversification

The 3 months correlation between STMicroelectronics and Pure is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and Pure Storage, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pure Storage, 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 are associated (or correlated) with Pure Storage,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pure Storage, has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and Pure Storage, go up and down completely randomly.

Pair Corralation between STMicroelectronics and Pure Storage,

Assuming the 90 days trading horizon STMicroelectronics NV is expected to under-perform the Pure Storage,. But the stock apears to be less risky and, when comparing its historical volatility, STMicroelectronics NV is 1.72 times less risky than Pure Storage,. The stock trades about -0.04 of its potential returns per unit of risk. The Pure Storage, is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  4,456  in Pure Storage, on October 8, 2024 and sell it today you would earn a total of  5,424  from holding Pure Storage, or generate 121.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	84.06%
Values	Daily Returns

STMicroelectronics NV  vs.  Pure Storage,

STMicroelectronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days STMicroelectronics NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, STMicroelectronics is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pure Storage,

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pure Storage, are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Pure Storage, sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with STMicroelectronics and Pure Storage,

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

The idea behind STMicroelectronics NV and Pure Storage, 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.