Correlation Between IDP EDUCATION and STMicroelectronics

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

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

Diversification Opportunities for IDP EDUCATION and STMicroelectronics

-0.44

Correlation Coefficient

IDP EDUCATION  STMicroelectronics

Very good diversification

The 3 months correlation between IDP and STMicroelectronics is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding IDP EDUCATION LTD and STMicroelectronics NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMicroelectronics and IDP EDUCATION 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 IDP EDUCATION LTD 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 has no effect on the direction of IDP EDUCATION i.e., IDP EDUCATION and STMicroelectronics go up and down completely randomly.

Pair Corralation between IDP EDUCATION and STMicroelectronics

Assuming the 90 days horizon IDP EDUCATION LTD is expected to under-perform the STMicroelectronics. In addition to that, IDP EDUCATION is 2.31 times more volatile than STMicroelectronics NV. It trades about -0.01 of its total potential returns per unit of risk. STMicroelectronics NV is currently generating about 0.01 per unit of volatility. If you would invest  2,256  in STMicroelectronics NV on June 13, 2025 and sell it today you would lose (29.00) from holding STMicroelectronics NV or give up 1.29% of portfolio value over 90 days.

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

IDP EDUCATION LTD  vs.  STMicroelectronics NV

IDP EDUCATION LTD

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in IDP EDUCATION LTD are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, IDP EDUCATION reported solid returns over the last few months and may actually be approaching a breakup point.

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 latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with IDP EDUCATION and STMicroelectronics

The main advantage of trading using opposite IDP EDUCATION and STMicroelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IDP EDUCATION 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 IDP EDUCATION LTD and STMicroelectronics NV 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.

Check out your portfolio center.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.