Correlation Between CARSALESCOM and STMicroelectronics

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

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

Diversification Opportunities for CARSALESCOM and STMicroelectronics

-0.59

Correlation Coefficient

CARSALESCOM  STMicroelectronics

Excellent diversification

The 3 months correlation between CARSALESCOM and STMicroelectronics is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding CARSALESCOM and STMicroelectronics NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMicroelectronics and CARSALESCOM 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 CARSALESCOM 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 has no effect on the direction of CARSALESCOM i.e., CARSALESCOM and STMicroelectronics go up and down completely randomly.

Pair Corralation between CARSALESCOM and STMicroelectronics

Assuming the 90 days trading horizon CARSALESCOM is expected to generate 0.53 times more return on investment than STMicroelectronics. However, CARSALESCOM is 1.89 times less risky than STMicroelectronics. It trades about 0.07 of its potential returns per unit of risk. STMicroelectronics NV is currently generating about -0.12 per unit of risk. If you would invest  2,058  in CARSALESCOM on June 16, 2025 and sell it today you would earn a total of  102.00  from holding CARSALESCOM or generate 4.96% return on investment over 90 days.

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

CARSALESCOM  vs.  STMicroelectronics NV

CARSALESCOM

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in CARSALESCOM are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, CARSALESCOM may actually be approaching a critical reversion point that can send shares even higher in October 2025.

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 uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with CARSALESCOM and STMicroelectronics

The main advantage of trading using opposite CARSALESCOM and STMicroelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CARSALESCOM 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 CARSALESCOM and STMicroelectronics NV 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 AI Portfolio Prophet module to use AI to generate optimal portfolios and find profitable investment opportunities.