Correlation Between STMicroelectronics and Cheops Technology

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

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

Diversification Opportunities for STMicroelectronics and Cheops Technology

-0.36

Correlation Coefficient

STMicroelectronics  Cheops Technology

Very good diversification

The 3 months correlation between STMicroelectronics and Cheops is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and Cheops Technology France in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheops Technology France 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 Cheops Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheops Technology France has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and Cheops Technology go up and down completely randomly.

Pair Corralation between STMicroelectronics and Cheops Technology

Assuming the 90 days trading horizon STMicroelectronics NV is expected to generate 0.93 times more return on investment than Cheops Technology. However, STMicroelectronics NV is 1.07 times less risky than Cheops Technology. It trades about 0.22 of its potential returns per unit of risk. Cheops Technology France is currently generating about -0.01 per unit of risk. If you would invest  2,018  in STMicroelectronics NV on April 24, 2025 and sell it today you would earn a total of  798.00  from holding STMicroelectronics NV or generate 39.54% 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.  Cheops Technology France

STMicroelectronics

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in STMicroelectronics NV are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, STMicroelectronics reported solid returns over the last few months and may actually be approaching a breakup point.

Cheops Technology France

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cheops Technology France has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Cheops Technology is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with STMicroelectronics and Cheops Technology

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

The idea behind STMicroelectronics NV and Cheops Technology France 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.