Correlation Between STMicroelectronics and Bemobi Mobile

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

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

Diversification Opportunities for STMicroelectronics and Bemobi Mobile

0.7

Correlation Coefficient

STMicroelectronics  Bemobi Mobile

Poor diversification

The 3 months correlation between STMicroelectronics and Bemobi is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and Bemobi Mobile Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bemobi Mobile Tech 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 Bemobi Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bemobi Mobile Tech has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and Bemobi Mobile go up and down completely randomly.

Pair Corralation between STMicroelectronics and Bemobi Mobile

Assuming the 90 days trading horizon STMicroelectronics NV is expected to under-perform the Bemobi Mobile. In addition to that, STMicroelectronics is 1.05 times more volatile than Bemobi Mobile Tech. It trades about -0.09 of its total potential returns per unit of risk. Bemobi Mobile Tech is currently generating about -0.04 per unit of volatility. If you would invest  1,533  in Bemobi Mobile Tech on September 3, 2024 and sell it today you would lose (83.00) from holding Bemobi Mobile Tech or give up 5.41% of portfolio value over 90 days.

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

STMicroelectronics NV  vs.  Bemobi Mobile Tech

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 latest weak performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Bemobi Mobile Tech

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with STMicroelectronics and Bemobi Mobile

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

The idea behind STMicroelectronics NV and Bemobi Mobile Tech 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.