Correlation Between Forgame Holdings and STMicroelectronics

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

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

Diversification Opportunities for Forgame Holdings and STMicroelectronics

0.47

Correlation Coefficient

Forgame Holdings  STMicroelectronics

Very weak diversification

The 3 months correlation between Forgame and STMicroelectronics is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Forgame Holdings and STMicroelectronics NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMicroelectronics and Forgame Holdings 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 Forgame Holdings 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 Forgame Holdings i.e., Forgame Holdings and STMicroelectronics go up and down completely randomly.

Pair Corralation between Forgame Holdings and STMicroelectronics

Assuming the 90 days trading horizon Forgame Holdings is expected to generate 1.89 times more return on investment than STMicroelectronics. However, Forgame Holdings is 1.89 times more volatile than STMicroelectronics NV. It trades about 0.01 of its potential returns per unit of risk. STMicroelectronics NV is currently generating about -0.03 per unit of risk. If you would invest  12.00  in Forgame Holdings on April 19, 2025 and sell it today you would lose (3.00) from holding Forgame Holdings or give up 25.0% of portfolio value over 90 days.

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

Forgame Holdings  vs.  STMicroelectronics NV

Forgame Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Forgame Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Forgame Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

STMicroelectronics

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in STMicroelectronics NV are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, STMicroelectronics reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Forgame Holdings and STMicroelectronics

The main advantage of trading using opposite Forgame Holdings and STMicroelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Forgame Holdings 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 Forgame Holdings 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 CEOs Directory module to screen CEOs from public companies around the world.