Correlation Between STMicroelectronics and Princess Private

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

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

Diversification Opportunities for STMicroelectronics and Princess Private

0.75

Correlation Coefficient

STMicroelectronics  Princess Private

Poor diversification

The 3 months correlation between STMicroelectronics and Princess is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and Princess Private Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Princess Private Equity 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 Princess Private. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Princess Private Equity has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and Princess Private go up and down completely randomly.

Pair Corralation between STMicroelectronics and Princess Private

Assuming the 90 days trading horizon STMicroelectronics NV is expected to generate 3.35 times more return on investment than Princess Private. However, STMicroelectronics is 3.35 times more volatile than Princess Private Equity. It trades about 0.27 of its potential returns per unit of risk. Princess Private Equity is currently generating about 0.07 per unit of risk. If you would invest  1,746  in STMicroelectronics NV on April 22, 2025 and sell it today you would earn a total of  1,027  from holding STMicroelectronics NV or generate 58.82% return on investment over 90 days.

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

STMicroelectronics NV  vs.  Princess Private Equity

STMicroelectronics

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in STMicroelectronics NV are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, STMicroelectronics unveiled solid returns over the last few months and may actually be approaching a breakup point.

Princess Private Equity

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Princess Private Equity are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Princess Private is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with STMicroelectronics and Princess Private

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

The idea behind STMicroelectronics NV and Princess Private Equity 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 CEOs Directory module to screen CEOs from public companies around the world.