Correlation Between Synopsys and STMicroelectronics

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

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

Diversification Opportunities for Synopsys and STMicroelectronics

0.39

Correlation Coefficient

Synopsys  STMicroelectronics

Weak diversification

The 3 months correlation between Synopsys and STMicroelectronics is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Synopsys and STMicroelectronics NV ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMicroelectronics NV ADR and Synopsys 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 Synopsys 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 NV ADR has no effect on the direction of Synopsys i.e., Synopsys and STMicroelectronics go up and down completely randomly.

Pair Corralation between Synopsys and STMicroelectronics

Given the investment horizon of 90 days Synopsys is expected to under-perform the STMicroelectronics. In addition to that, Synopsys is 1.99 times more volatile than STMicroelectronics NV ADR. It trades about -0.09 of its total potential returns per unit of risk. STMicroelectronics NV ADR is currently generating about -0.1 per unit of volatility. If you would invest  2,722  in STMicroelectronics NV ADR on August 25, 2025 and sell it today you would lose (525.00) from holding STMicroelectronics NV ADR or give up 19.29% of portfolio value over 90 days.

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

Synopsys  vs.  STMicroelectronics NV ADR

Synopsys

Risk-Adjusted Performance

Weakest

Over the last 90 days Synopsys has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

STMicroelectronics NV ADR

Risk-Adjusted Performance

Weakest

Over the last 90 days STMicroelectronics NV ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in December 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Synopsys and STMicroelectronics

The main advantage of trading using opposite Synopsys and STMicroelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Synopsys 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 Synopsys and STMicroelectronics NV ADR 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 Global Correlations module to find global opportunities by holding instruments from different markets.