Correlation Between STMicroelectronics and Himax Technologies

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

Diversification Opportunities for STMicroelectronics and Himax Technologies

0.73

Correlation Coefficient

STMicroelectronics  Himax Technologies

Poor diversification

The 3 months correlation between STMicroelectronics and Himax is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV ADR and Himax Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Himax Technologies 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 Himax Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Himax Technologies has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and Himax Technologies go up and down completely randomly.

Pair Corralation between STMicroelectronics and Himax Technologies

Considering the 90-day investment horizon STMicroelectronics NV ADR is expected to generate 1.08 times more return on investment than Himax Technologies. However, STMicroelectronics is 1.08 times more volatile than Himax Technologies. It trades about 0.27 of its potential returns per unit of risk. Himax Technologies is currently generating about 0.29 per unit of risk. If you would invest  2,171  in STMicroelectronics NV ADR on April 23, 2025 and sell it today you would earn a total of  1,110  from holding STMicroelectronics NV ADR or generate 51.13% return on investment over 90 days.

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

STMicroelectronics NV ADR  vs.  Himax Technologies

STMicroelectronics NV ADR

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in STMicroelectronics NV ADR are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, STMicroelectronics displayed solid returns over the last few months and may actually be approaching a breakup point.

Himax Technologies

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Himax Technologies are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, Himax Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with STMicroelectronics and Himax Technologies

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

The idea behind STMicroelectronics NV ADR and Himax Technologies 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.