Correlation Between STMicroelectronics and Entegris

Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and Entegris 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 Entegris 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 Entegris, you can compare the effects of market volatilities on STMicroelectronics and Entegris 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 Entegris. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and Entegris.

Diversification Opportunities for STMicroelectronics and Entegris

0.8

Correlation Coefficient

STMicroelectronics  Entegris

Very poor diversification

The 3 months correlation between STMicroelectronics and Entegris is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV ADR and Entegris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entegris 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 Entegris. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entegris has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and Entegris go up and down completely randomly.

Pair Corralation between STMicroelectronics and Entegris

Considering the 90-day investment horizon STMicroelectronics NV ADR is expected to generate 0.94 times more return on investment than Entegris. However, STMicroelectronics NV ADR is 1.07 times less risky than Entegris. It trades about -0.06 of its potential returns per unit of risk. Entegris is currently generating about -0.12 per unit of risk. If you would invest  2,565  in STMicroelectronics NV ADR on January 20, 2025 and sell it today you would lose (539.00) from holding STMicroelectronics NV ADR or give up 21.01% of portfolio value over 90 days.

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

STMicroelectronics NV ADR  vs.  Entegris

STMicroelectronics NV ADR

Risk-Adjusted Performance

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 May 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Entegris

Risk-Adjusted Performance

Very Weak

Over the last 90 days Entegris has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in May 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with STMicroelectronics and Entegris

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

The idea behind STMicroelectronics NV ADR and Entegris 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 Channel module to use Commodity Channel Index to analyze current equity momentum.