Correlation Between Stmicroelectronics and FUJIAN AONONG

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

Diversification Opportunities for Stmicroelectronics and FUJIAN AONONG

0.43
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Stmicroelectronics and FUJIAN is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Stmicroelectronics NV ADR and FUJIAN AONONG BIOLOGICAL TECHN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FUJIAN AONONG BIOLOG 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 FUJIAN AONONG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FUJIAN AONONG BIOLOG has no effect on the direction of Stmicroelectronics i.e., Stmicroelectronics and FUJIAN AONONG go up and down completely randomly.

Pair Corralation between Stmicroelectronics and FUJIAN AONONG

Considering the 90-day investment horizon Stmicroelectronics is expected to generate 3.42 times less return on investment than FUJIAN AONONG. But when comparing it to its historical volatility, Stmicroelectronics NV ADR is 1.63 times less risky than FUJIAN AONONG. It trades about 0.01 of its potential returns per unit of risk. FUJIAN AONONG BIOLOGICAL is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,455  in FUJIAN AONONG BIOLOGICAL on June 30, 2022 and sell it today you would earn a total of  160.00  from holding FUJIAN AONONG BIOLOGICAL or generate 11.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy78.67%
ValuesDaily Returns

Stmicroelectronics NV ADR  vs.  FUJIAN AONONG BIOLOGICAL TECHN

 Performance (%) 
       Timeline  
Stmicroelectronics NV ADR 
Stmicroelectronics Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Stmicroelectronics NV ADR are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively steady basic indicators, Stmicroelectronics is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

Stmicroelectronics Price Channel

FUJIAN AONONG BIOLOG 
FUJIAN Performance
0 of 100
Over the last 90 days FUJIAN AONONG BIOLOGICAL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in October 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

FUJIAN Price Channel

Stmicroelectronics and FUJIAN AONONG Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Stmicroelectronics and FUJIAN AONONG

The main advantage of trading using opposite Stmicroelectronics and FUJIAN AONONG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stmicroelectronics position performs unexpectedly, FUJIAN AONONG 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 FUJIAN AONONG will offset losses from the drop in FUJIAN AONONG's long position.
Stmicroelectronics vs. Kibush Capital Corp
The idea behind Stmicroelectronics NV ADR and FUJIAN AONONG BIOLOGICAL 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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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 Focused Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.

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