Correlation Between STMicroelectronics and SUPERNOVA METALS

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

By analyzing existing cross correlation between STMicroelectronics NV and SUPERNOVA METALS P, you can compare the effects of market volatilities on STMicroelectronics and SUPERNOVA METALS 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 SUPERNOVA METALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and SUPERNOVA METALS.

Diversification Opportunities for STMicroelectronics and SUPERNOVA METALS

0.41

Correlation Coefficient

STMicroelectronics  SUPERNOVA METALS

Very weak diversification

The 3 months correlation between STMicroelectronics and SUPERNOVA is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and SUPERNOVA METALS P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SUPERNOVA METALS P 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 NV are associated (or correlated) with SUPERNOVA METALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SUPERNOVA METALS P has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and SUPERNOVA METALS go up and down completely randomly.

Pair Corralation between STMicroelectronics and SUPERNOVA METALS

If you would invest  2,504  in STMicroelectronics NV on April 20, 2025 and sell it today you would earn a total of  298.00  from holding STMicroelectronics NV or generate 11.9% return on investment over 90 days.

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

STMicroelectronics NV  vs.  SUPERNOVA METALS P

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.

SUPERNOVA METALS P

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SUPERNOVA METALS P are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, SUPERNOVA METALS 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 SUPERNOVA METALS

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

The idea behind STMicroelectronics NV and SUPERNOVA METALS P 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.