Correlation Between Uber Technologies and STMicroelectronics

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

By analyzing existing cross correlation between Uber Technologies and STMicroelectronics NV ADR, you can compare the effects of market volatilities on Uber Technologies and STMicroelectronics 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 Uber Technologies with a short position of STMicroelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Uber Technologies and STMicroelectronics.

Diversification Opportunities for Uber Technologies and STMicroelectronics

0.71

Correlation Coefficient

Uber Technologies  STMicroelectronics

Poor diversification

The 3 months correlation between Uber and STMicroelectronics is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Uber Technologies and STMicroelectronics NV ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMicroelectronics NV ADR and Uber Technologies 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 Uber Technologies are associated (or correlated) with STMicroelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STMicroelectronics NV ADR has no effect on the direction of Uber Technologies i.e., Uber Technologies and STMicroelectronics go up and down completely randomly.

Pair Corralation between Uber Technologies and STMicroelectronics

Given the investment horizon of 90 days Uber Technologies is expected to generate 2.08 times less return on investment than STMicroelectronics. But when comparing it to its historical volatility, Uber Technologies is 1.63 times less risky than STMicroelectronics. It trades about 0.06 of its potential returns per unit of risk. STMicroelectronics NV ADR is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2,423  in STMicroelectronics NV ADR on March 23, 2025 and sell it today you would earn a total of  444.00  from holding STMicroelectronics NV ADR or generate 18.32% return on investment over 90 days.

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

Uber Technologies  vs.  STMicroelectronics NV ADR

Uber Technologies

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Uber Technologies are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating technical and fundamental indicators, Uber Technologies may actually be approaching a critical reversion point that can send shares even higher in July 2025.

STMicroelectronics NV ADR

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in STMicroelectronics NV ADR are ranked lower than 6 (%) 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.

Pair Trading with Uber Technologies and STMicroelectronics

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

The idea behind Uber Technologies and STMicroelectronics NV ADR 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.