Correlation Between STMicroelectronics and Soluna Holdings

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

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

Diversification Opportunities for STMicroelectronics and Soluna Holdings

0.1

Correlation Coefficient

STMicroelectronics  Soluna Holdings

Average diversification

The 3 months correlation between STMicroelectronics and Soluna is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and Soluna Holdings Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soluna Holdings Preferred 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 Soluna Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soluna Holdings Preferred has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and Soluna Holdings go up and down completely randomly.

Pair Corralation between STMicroelectronics and Soluna Holdings

Assuming the 90 days horizon STMicroelectronics is expected to generate 3.94 times less return on investment than Soluna Holdings. But when comparing it to its historical volatility, STMicroelectronics NV is 2.78 times less risky than Soluna Holdings. It trades about 0.04 of its potential returns per unit of risk. Soluna Holdings Preferred is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  345.00  in Soluna Holdings Preferred on May 12, 2025 and sell it today you would earn a total of  18.00  from holding Soluna Holdings Preferred or generate 5.22% return on investment over 90 days.

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

STMicroelectronics NV  vs.  Soluna Holdings Preferred

STMicroelectronics

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in STMicroelectronics NV are ranked lower than 3 (%) 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.

Soluna Holdings Preferred

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Soluna Holdings Preferred are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent technical indicators, Soluna Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with STMicroelectronics and Soluna Holdings

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

The idea behind STMicroelectronics NV and Soluna Holdings Preferred 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.