Correlation Between STMicroelectronics and Amadeus IT

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

By analyzing existing cross correlation between STMicroelectronics NV and Amadeus IT Holding, you can compare the effects of market volatilities on STMicroelectronics and Amadeus IT 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 Amadeus IT. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and Amadeus IT.

Diversification Opportunities for STMicroelectronics and Amadeus IT

0.2

Correlation Coefficient

STMicroelectronics  Amadeus IT

Modest diversification

The 3 months correlation between STMicroelectronics and Amadeus is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and Amadeus IT Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amadeus IT Holding 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 are associated (or correlated) with Amadeus IT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amadeus IT Holding has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and Amadeus IT go up and down completely randomly.

Pair Corralation between STMicroelectronics and Amadeus IT

Assuming the 90 days horizon STMicroelectronics NV is expected to under-perform the Amadeus IT. In addition to that, STMicroelectronics is 2.31 times more volatile than Amadeus IT Holding. It trades about -0.05 of its total potential returns per unit of risk. Amadeus IT Holding is currently generating about -0.06 per unit of volatility. If you would invest  8,386  in Amadeus IT Holding on July 9, 2025 and sell it today you would lose (391.00) from holding Amadeus IT Holding or give up 4.66% of portfolio value over 90 days.

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

STMicroelectronics NV  vs.  Amadeus IT Holding

STMicroelectronics

Risk-Adjusted Performance

Weakest

Over the last 90 days STMicroelectronics NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Amadeus IT Holding

Risk-Adjusted Performance

Weakest

Over the last 90 days Amadeus IT Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, Amadeus IT is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with STMicroelectronics and Amadeus IT

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

The idea behind STMicroelectronics NV and Amadeus IT Holding 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..