Correlation Between Aptitude Software and STMicroelectronics

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

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

Diversification Opportunities for Aptitude Software and STMicroelectronics

0.77

Correlation Coefficient

Aptitude Software  STMicroelectronics

Poor diversification

The 3 months correlation between Aptitude and STMicroelectronics is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Aptitude Software Group and STMicroelectronics NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMicroelectronics and Aptitude Software 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 Aptitude Software Group 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 has no effect on the direction of Aptitude Software i.e., Aptitude Software and STMicroelectronics go up and down completely randomly.

Pair Corralation between Aptitude Software and STMicroelectronics

Assuming the 90 days trading horizon Aptitude Software is expected to generate 8.79 times less return on investment than STMicroelectronics. But when comparing it to its historical volatility, Aptitude Software Group is 1.18 times less risky than STMicroelectronics. It trades about 0.04 of its potential returns per unit of risk. STMicroelectronics NV is currently generating about 0.27 of returns per unit of risk over similar time horizon. 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

Aptitude Software Group  vs.  STMicroelectronics NV

Aptitude Software

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aptitude Software Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Aptitude Software is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

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.

Pair Trading with Aptitude Software and STMicroelectronics

The main advantage of trading using opposite Aptitude Software and STMicroelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aptitude Software 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 Aptitude Software Group and STMicroelectronics NV 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.

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 the Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.