Correlation Between STMicroelectronics and Dewey Electronics

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

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

Diversification Opportunities for STMicroelectronics and Dewey Electronics

-0.05

Correlation Coefficient

STMicroelectronics  Dewey Electronics

Good diversification

The 3 months correlation between STMicroelectronics and Dewey is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and The Dewey Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dewey Electronics 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 Dewey Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dewey Electronics has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and Dewey Electronics go up and down completely randomly.

Pair Corralation between STMicroelectronics and Dewey Electronics

Assuming the 90 days horizon STMicroelectronics is expected to generate 32.06 times less return on investment than Dewey Electronics. In addition to that, STMicroelectronics is 1.1 times more volatile than The Dewey Electronics. It trades about 0.0 of its total potential returns per unit of risk. The Dewey Electronics is currently generating about 0.12 per unit of volatility. If you would invest  216.00  in The Dewey Electronics on September 7, 2025 and sell it today you would earn a total of  39.00  from holding The Dewey Electronics or generate 18.06% return on investment over 90 days.

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

STMicroelectronics NV  vs.  The Dewey Electronics

STMicroelectronics

Risk-Adjusted Performance

Weakest

Over the last 90 days STMicroelectronics NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, STMicroelectronics is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Dewey Electronics

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in The Dewey Electronics are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Dewey Electronics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with STMicroelectronics and Dewey Electronics

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

The idea behind STMicroelectronics NV and The Dewey Electronics 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.