Correlation Between STMicroelectronics and Siriuspoint

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

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

Diversification Opportunities for STMicroelectronics and Siriuspoint

-0.54

Correlation Coefficient

STMicroelectronics  Siriuspoint

Excellent diversification

The 3 months correlation between STMicroelectronics and Siriuspoint is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV ADR and Siriuspoint in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siriuspoint 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 ADR are associated (or correlated) with Siriuspoint. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siriuspoint has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and Siriuspoint go up and down completely randomly.

Pair Corralation between STMicroelectronics and Siriuspoint

Considering the 90-day investment horizon STMicroelectronics NV ADR is expected to under-perform the Siriuspoint. But the stock apears to be less risky and, when comparing its historical volatility, STMicroelectronics NV ADR is 1.53 times less risky than Siriuspoint. The stock trades about -0.11 of its potential returns per unit of risk. The Siriuspoint is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,397  in Siriuspoint on October 2, 2024 and sell it today you would earn a total of  242.00  from holding Siriuspoint or generate 17.32% return on investment over 90 days.

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

STMicroelectronics NV ADR  vs.  Siriuspoint

STMicroelectronics NV ADR

Risk-Adjusted Performance

0 of 100

Very Weak

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 inconsistent performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Siriuspoint

Risk-Adjusted Performance

8 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Siriuspoint are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Siriuspoint unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with STMicroelectronics and Siriuspoint

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

The idea behind STMicroelectronics NV ADR and Siriuspoint 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 Commodity Directory module to find actively traded commodities issued by global exchanges.