Correlation Between Gaming Realms and STMicroelectronics

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

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

Diversification Opportunities for Gaming Realms and STMicroelectronics

0.92

Correlation Coefficient

Gaming Realms  STMicroelectronics

Almost no diversification

The 3 months correlation between Gaming and STMicroelectronics is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Gaming Realms plc and STMicroelectronics NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMicroelectronics and Gaming Realms 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 Gaming Realms plc 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 Gaming Realms i.e., Gaming Realms and STMicroelectronics go up and down completely randomly.

Pair Corralation between Gaming Realms and STMicroelectronics

Assuming the 90 days trading horizon Gaming Realms is expected to generate 1.26 times less return on investment than STMicroelectronics. But when comparing it to its historical volatility, Gaming Realms plc is 1.21 times less risky than STMicroelectronics. It trades about 0.24 of its potential returns per unit of risk. STMicroelectronics NV is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  1,876  in STMicroelectronics NV on April 23, 2025 and sell it today you would earn a total of  956.00  from holding STMicroelectronics NV or generate 50.96% return on investment over 90 days.

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

Gaming Realms plc  vs.  STMicroelectronics NV

Gaming Realms plc

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Gaming Realms plc are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Gaming Realms exhibited 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. In spite of comparatively unsteady basic indicators, STMicroelectronics unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gaming Realms and STMicroelectronics

The main advantage of trading using opposite Gaming Realms and STMicroelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gaming Realms 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 Gaming Realms plc 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.