Correlation Between STMicroelectronics and PDF Solutions

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

Diversification Opportunities for STMicroelectronics and PDF Solutions

-0.05

Correlation Coefficient

STMicroelectronics  PDF Solutions

Good diversification

The 3 months correlation between STMicroelectronics and PDF is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV ADR and PDF Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PDF Solutions 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 PDF Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PDF Solutions has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and PDF Solutions go up and down completely randomly.

Pair Corralation between STMicroelectronics and PDF Solutions

Considering the 90-day investment horizon STMicroelectronics is expected to generate 1.67 times less return on investment than PDF Solutions. But when comparing it to its historical volatility, STMicroelectronics NV ADR is 1.1 times less risky than PDF Solutions. It trades about 0.22 of its potential returns per unit of risk. PDF Solutions is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest  2,511  in PDF Solutions on September 15, 2025 and sell it today you would earn a total of  503.00  from holding PDF Solutions or generate 20.03% return on investment over 90 days.

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

STMicroelectronics NV ADR  vs.  PDF Solutions

STMicroelectronics NV ADR

Risk-Adjusted Performance

Weakest

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 very healthy basic indicators, STMicroelectronics is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

PDF Solutions

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in PDF Solutions are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, PDF Solutions unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with STMicroelectronics and PDF Solutions

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

The idea behind STMicroelectronics NV ADR and PDF Solutions 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.