Correlation Between Logitech International and STMicroelectronics

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

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

Diversification Opportunities for Logitech International and STMicroelectronics

0.2

Correlation Coefficient

Logitech International  STMicroelectronics

Modest diversification

The 3 months correlation between Logitech and STMicroelectronics is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Logitech International SA and STMicroelectronics NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMicroelectronics and Logitech International 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 Logitech International SA 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 Logitech International i.e., Logitech International and STMicroelectronics go up and down completely randomly.

Pair Corralation between Logitech International and STMicroelectronics

Given the investment horizon of 90 days Logitech International SA is expected to generate 0.46 times more return on investment than STMicroelectronics. However, Logitech International SA is 2.19 times less risky than STMicroelectronics. It trades about 0.13 of its potential returns per unit of risk. STMicroelectronics NV is currently generating about 0.06 per unit of risk. If you would invest  8,650  in Logitech International SA on May 18, 2025 and sell it today you would earn a total of  1,126  from holding Logitech International SA or generate 13.02% return on investment over 90 days.

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

Logitech International SA  vs.  STMicroelectronics NV

Logitech International

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Logitech International SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile technical and fundamental indicators, Logitech International demonstrated solid returns over the last few months and may actually be approaching a breakup point.

STMicroelectronics

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in STMicroelectronics NV are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, STMicroelectronics may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Logitech International and STMicroelectronics

The main advantage of trading using opposite Logitech International and STMicroelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Logitech International 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 Logitech International SA 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.