Correlation Between STMicroelectronics and IBU Tec

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

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

Diversification Opportunities for STMicroelectronics and IBU Tec

0.59

Correlation Coefficient

STMicroelectronics  IBU Tec

Very weak diversification

The 3 months correlation between STMicroelectronics and IBU is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and IBU tec advanced materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IBU tec advanced 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 IBU Tec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IBU tec advanced has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and IBU Tec go up and down completely randomly.

Pair Corralation between STMicroelectronics and IBU Tec

Assuming the 90 days horizon STMicroelectronics NV is expected to generate 0.53 times more return on investment than IBU Tec. However, STMicroelectronics NV is 1.89 times less risky than IBU Tec. It trades about -0.03 of its potential returns per unit of risk. IBU tec advanced materials is currently generating about -0.02 per unit of risk. If you would invest  4,633  in STMicroelectronics NV on April 23, 2025 and sell it today you would lose (1,795) from holding STMicroelectronics NV or give up 38.74% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

STMicroelectronics NV  vs.  IBU tec advanced materials

STMicroelectronics

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in STMicroelectronics NV are ranked lower than 18 (%) 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.

IBU tec advanced

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in IBU tec advanced materials are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, IBU Tec unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with STMicroelectronics and IBU Tec

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

The idea behind STMicroelectronics NV and IBU tec advanced materials 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.