Correlation Between Zhejiang Chengchang and STMicroelectronics

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

By analyzing existing cross correlation between Zhejiang Chengchang Technology and STMicroelectronics NV ADR, you can compare the effects of market volatilities on Zhejiang Chengchang and STMicroelectronics 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 Zhejiang Chengchang with a short position of STMicroelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhejiang Chengchang and STMicroelectronics.

Diversification Opportunities for Zhejiang Chengchang and STMicroelectronics

-0.18

Correlation Coefficient

Zhejiang Chengchang  STMicroelectronics

Good diversification

The 3 months correlation between Zhejiang and STMicroelectronics is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Zhejiang Chengchang Technology and STMicroelectronics NV ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMicroelectronics NV ADR and Zhejiang Chengchang 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 Zhejiang Chengchang Technology are associated (or correlated) with STMicroelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STMicroelectronics NV ADR has no effect on the direction of Zhejiang Chengchang i.e., Zhejiang Chengchang and STMicroelectronics go up and down completely randomly.

Pair Corralation between Zhejiang Chengchang and STMicroelectronics

Assuming the 90 days trading horizon Zhejiang Chengchang Technology is expected to generate 0.78 times more return on investment than STMicroelectronics. However, Zhejiang Chengchang Technology is 1.28 times less risky than STMicroelectronics. It trades about -0.01 of its potential returns per unit of risk. STMicroelectronics NV ADR is currently generating about -0.09 per unit of risk. If you would invest  4,438  in Zhejiang Chengchang Technology on August 27, 2025 and sell it today you would lose (95.00) from holding Zhejiang Chengchang Technology or give up 2.14% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	92.19%
Values	Daily Returns

Zhejiang Chengchang Technology  vs.  STMicroelectronics NV ADR

Zhejiang Chengchang

Risk-Adjusted Performance

Weakest

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

STMicroelectronics NV ADR

Risk-Adjusted Performance

Weakest

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

Pair Trading with Zhejiang Chengchang and STMicroelectronics

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

The idea behind Zhejiang Chengchang Technology and STMicroelectronics NV ADR 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.