Correlation Between Intermediate Capital and STMicroelectronics

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

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

Diversification Opportunities for Intermediate Capital and STMicroelectronics

0.37

Correlation Coefficient

Intermediate Capital  STMicroelectronics

Weak diversification

The 3 months correlation between Intermediate and STMicroelectronics is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Intermediate Capital Group and STMicroelectronics NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMicroelectronics and Intermediate Capital 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 Intermediate Capital Group 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 Intermediate Capital i.e., Intermediate Capital and STMicroelectronics go up and down completely randomly.

Pair Corralation between Intermediate Capital and STMicroelectronics

Assuming the 90 days trading horizon Intermediate Capital is expected to generate 1.2 times less return on investment than STMicroelectronics. But when comparing it to its historical volatility, Intermediate Capital Group is 1.66 times less risky than STMicroelectronics. It trades about 0.1 of its potential returns per unit of risk. STMicroelectronics NV is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,999  in STMicroelectronics NV on May 1, 2025 and sell it today you would earn a total of  266.00  from holding STMicroelectronics NV or generate 13.31% return on investment over 90 days.

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

Intermediate Capital Group  vs.  STMicroelectronics NV

Intermediate Capital

Risk-Adjusted Performance

OK

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

STMicroelectronics

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in STMicroelectronics NV are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, STMicroelectronics reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Intermediate Capital and STMicroelectronics

The main advantage of trading using opposite Intermediate Capital and STMicroelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intermediate Capital 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 Intermediate Capital Group 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.