Correlation Between Cornish Metals and STMicroelectronics

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

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

Diversification Opportunities for Cornish Metals and STMicroelectronics

0.69

Correlation Coefficient

Cornish Metals  STMicroelectronics

Poor diversification

The 3 months correlation between Cornish and STMicroelectronics is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Cornish Metals and STMicroelectronics NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMicroelectronics and Cornish Metals 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 Cornish Metals 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 Cornish Metals i.e., Cornish Metals and STMicroelectronics go up and down completely randomly.

Pair Corralation between Cornish Metals and STMicroelectronics

Assuming the 90 days trading horizon Cornish Metals is expected to generate 3.29 times less return on investment than STMicroelectronics. In addition to that, Cornish Metals is 1.03 times more volatile than STMicroelectronics NV. It trades about 0.07 of its total potential returns per unit of risk. STMicroelectronics NV is currently generating about 0.22 per unit of volatility. If you would invest  1,975  in STMicroelectronics NV on April 24, 2025 and sell it today you would earn a total of  839.00  from holding STMicroelectronics NV or generate 42.48% return on investment over 90 days.

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

Cornish Metals  vs.  STMicroelectronics NV

Cornish Metals

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cornish Metals are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Cornish Metals may actually be approaching a critical reversion point that can send shares even higher in August 2025.

STMicroelectronics

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in STMicroelectronics NV are ranked lower than 17 (%) 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 Cornish Metals and STMicroelectronics

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

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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.