Correlation Between STMICROELECTRONICS and Computershare

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

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

Diversification Opportunities for STMICROELECTRONICS and Computershare

-0.12

Correlation Coefficient

STMICROELECTRONICS  Computershare

Good diversification

The 3 months correlation between STMICROELECTRONICS and Computershare is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding STMICROELECTRONICS and Computershare Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Computershare Limited and STMICROELECTRONICS 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 STMICROELECTRONICS are associated (or correlated) with Computershare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Computershare Limited has no effect on the direction of STMICROELECTRONICS i.e., STMICROELECTRONICS and Computershare go up and down completely randomly.

Pair Corralation between STMICROELECTRONICS and Computershare

Assuming the 90 days trading horizon STMICROELECTRONICS is expected to generate 1.51 times more return on investment than Computershare. However, STMICROELECTRONICS is 1.51 times more volatile than Computershare Limited. It trades about 0.27 of its potential returns per unit of risk. Computershare Limited is currently generating about 0.04 per unit of risk. If you would invest  1,924  in STMICROELECTRONICS on April 24, 2025 and sell it today you would earn a total of  874.00  from holding STMICROELECTRONICS or generate 45.43% return on investment over 90 days.

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

STMICROELECTRONICS  vs.  Computershare Limited

STMICROELECTRONICS

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in STMICROELECTRONICS are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain primary indicators, STMICROELECTRONICS exhibited solid returns over the last few months and may actually be approaching a breakup point.

Computershare Limited

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Computershare Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Computershare is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with STMICROELECTRONICS and Computershare

The main advantage of trading using opposite STMICROELECTRONICS and Computershare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMICROELECTRONICS position performs unexpectedly, Computershare 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 Computershare will offset losses from the drop in Computershare's long position.

The idea behind STMICROELECTRONICS and Computershare Limited 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.