Correlation Between Camtek and STMicroelectronics

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

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

Diversification Opportunities for Camtek and STMicroelectronics

0.85

Correlation Coefficient

Camtek  STMicroelectronics

Very poor diversification

The 3 months correlation between Camtek and STMicroelectronics is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Camtek 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 Camtek 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 Camtek 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 Camtek i.e., Camtek and STMicroelectronics go up and down completely randomly.

Pair Corralation between Camtek and STMicroelectronics

Given the investment horizon of 90 days Camtek is expected to generate 0.82 times more return on investment than STMicroelectronics. However, Camtek is 1.22 times less risky than STMicroelectronics. It trades about 0.23 of its potential returns per unit of risk. STMicroelectronics NV ADR is currently generating about 0.08 per unit of risk. If you would invest  6,637  in Camtek on April 28, 2025 and sell it today you would earn a total of  2,944  from holding Camtek or generate 44.36% return on investment over 90 days.

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

Camtek  vs.  STMicroelectronics NV ADR

Camtek

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Camtek are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating primary indicators, Camtek unveiled solid returns over the last few months and may actually be approaching a breakup point.

STMicroelectronics NV ADR

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in STMicroelectronics NV ADR are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, STMicroelectronics displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Camtek and STMicroelectronics

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

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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.