Correlation Between Hana Microelectronics and STMicroelectronics

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

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

Diversification Opportunities for Hana Microelectronics and STMicroelectronics

0.29

Correlation Coefficient

Hana Microelectronics  STMicroelectronics

Modest diversification

The 3 months correlation between Hana and STMicroelectronics is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Hana Microelectronics PCL and STMicroelectronics NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMicroelectronics and Hana Microelectronics 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 Hana Microelectronics PCL 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 Hana Microelectronics i.e., Hana Microelectronics and STMicroelectronics go up and down completely randomly.

Pair Corralation between Hana Microelectronics and STMicroelectronics

Assuming the 90 days trading horizon Hana Microelectronics is expected to generate 1.61 times less return on investment than STMicroelectronics. In addition to that, Hana Microelectronics is 1.37 times more volatile than STMicroelectronics NV. It trades about 0.11 of its total potential returns per unit of risk. STMicroelectronics NV is currently generating about 0.25 per unit of volatility. If you would invest  1,800  in STMicroelectronics NV on April 20, 2025 and sell it today you would earn a total of  1,002  from holding STMicroelectronics NV or generate 55.67% return on investment over 90 days.

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

Hana Microelectronics PCL  vs.  STMicroelectronics NV

Hana Microelectronics PCL

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hana Microelectronics PCL are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Hana Microelectronics 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 Hana Microelectronics and STMicroelectronics

The main advantage of trading using opposite Hana Microelectronics and STMicroelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hana Microelectronics 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 Hana Microelectronics PCL 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.