Correlation Between STMICROELECTRONICS and TRIPCOM GROUP

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

By analyzing existing cross correlation between STMICROELECTRONICS and TRIPCOM GROUP DL 00125, you can compare the effects of market volatilities on STMICROELECTRONICS and TRIPCOM GROUP 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 TRIPCOM GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMICROELECTRONICS and TRIPCOM GROUP.

Diversification Opportunities for STMICROELECTRONICS and TRIPCOM GROUP

-0.3

Correlation Coefficient

STMICROELECTRONICS  TRIPCOM GROUP

Very good diversification

The 3 months correlation between STMICROELECTRONICS and TRIPCOM is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding STMICROELECTRONICS and TRIPCOM GROUP DL 00125 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRIPCOM GROUP DL 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 TRIPCOM GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRIPCOM GROUP DL has no effect on the direction of STMICROELECTRONICS i.e., STMICROELECTRONICS and TRIPCOM GROUP go up and down completely randomly.

Pair Corralation between STMICROELECTRONICS and TRIPCOM GROUP

Assuming the 90 days trading horizon STMICROELECTRONICS is expected to generate 0.86 times more return on investment than TRIPCOM GROUP. However, STMICROELECTRONICS is 1.17 times less risky than TRIPCOM GROUP. It trades about 0.02 of its potential returns per unit of risk. TRIPCOM GROUP DL 00125 is currently generating about 0.01 per unit of risk. If you would invest  2,192  in STMICROELECTRONICS on May 26, 2025 and sell it today you would earn a total of  32.00  from holding STMICROELECTRONICS or generate 1.46% return on investment over 90 days.

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

STMICROELECTRONICS  vs.  TRIPCOM GROUP DL 00125

STMICROELECTRONICS

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in STMICROELECTRONICS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

TRIPCOM GROUP DL

Risk-Adjusted Performance

Weakest

Over the last 90 days TRIPCOM GROUP DL 00125 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, TRIPCOM GROUP is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with STMICROELECTRONICS and TRIPCOM GROUP

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

The idea behind STMICROELECTRONICS and TRIPCOM GROUP DL 00125 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.