Correlation Between Alliance Data and Elmos Semiconductor
Can any of the company-specific risk be diversified away by investing in both Alliance Data and Elmos Semiconductor 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 Alliance Data and Elmos Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alliance Data Systems and Elmos Semiconductor SE, you can compare the effects of market volatilities on Alliance Data and Elmos Semiconductor 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 Alliance Data with a short position of Elmos Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliance Data and Elmos Semiconductor.
Diversification Opportunities for Alliance Data and Elmos Semiconductor
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Alliance and Elmos is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Alliance Data Systems and Elmos Semiconductor SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elmos Semiconductor and Alliance Data 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 Alliance Data Systems are associated (or correlated) with Elmos Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elmos Semiconductor has no effect on the direction of Alliance Data i.e., Alliance Data and Elmos Semiconductor go up and down completely randomly.
Pair Corralation between Alliance Data and Elmos Semiconductor
Assuming the 90 days trading horizon Alliance Data Systems is expected to under-perform the Elmos Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, Alliance Data Systems is 1.1 times less risky than Elmos Semiconductor. The stock trades about -0.25 of its potential returns per unit of risk. The Elmos Semiconductor SE is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 7,480 in Elmos Semiconductor SE on November 28, 2024 and sell it today you would lose (395.00) from holding Elmos Semiconductor SE or give up 5.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
Alliance Data Systems vs. Elmos Semiconductor SE
Performance |
| Timeline |
| Alliance Data Systems |
| Elmos Semiconductor |
Alliance Data and Elmos Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alliance Data and Elmos Semiconductor
The main advantage of trading using opposite Alliance Data and Elmos Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alliance Data position performs unexpectedly, Elmos Semiconductor 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 Elmos Semiconductor will offset losses from the drop in Elmos Semiconductor's long position.| Alliance Data vs. Finnair Oyj | Alliance Data vs. Allianz Technology Trust | Alliance Data vs. Wizz Air Holdings | Alliance Data vs. Sartorius Stedim Biotech |
| Elmos Semiconductor vs. Associated British Foods | Elmos Semiconductor vs. Air Products Chemicals | Elmos Semiconductor vs. National Beverage Corp | Elmos Semiconductor vs. Supermarket Income REIT |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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