Correlation Between Elmos Semiconductor and Spirent Communications
Can any of the company-specific risk be diversified away by investing in both Elmos Semiconductor and Spirent Communications 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 Elmos Semiconductor and Spirent Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elmos Semiconductor SE and Spirent Communications plc, you can compare the effects of market volatilities on Elmos Semiconductor and Spirent Communications 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 Elmos Semiconductor with a short position of Spirent Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elmos Semiconductor and Spirent Communications.
Diversification Opportunities for Elmos Semiconductor and Spirent Communications
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Elmos and Spirent is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Elmos Semiconductor SE and Spirent Communications plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spirent Communications and Elmos Semiconductor 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 Elmos Semiconductor SE are associated (or correlated) with Spirent Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spirent Communications has no effect on the direction of Elmos Semiconductor i.e., Elmos Semiconductor and Spirent Communications go up and down completely randomly.
Pair Corralation between Elmos Semiconductor and Spirent Communications
Assuming the 90 days trading horizon Elmos Semiconductor SE is expected to under-perform the Spirent Communications. In addition to that, Elmos Semiconductor is 3.75 times more volatile than Spirent Communications plc. It trades about -0.05 of its total potential returns per unit of risk. Spirent Communications plc is currently generating about -0.11 per unit of volatility. If you would invest 19,340 in Spirent Communications plc on September 3, 2024 and sell it today you would lose (2,210) from holding Spirent Communications plc or give up 11.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elmos Semiconductor SE vs. Spirent Communications plc
Performance |
| Timeline |
| Elmos Semiconductor |
| Spirent Communications |
Elmos Semiconductor and Spirent Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elmos Semiconductor and Spirent Communications
The main advantage of trading using opposite Elmos Semiconductor and Spirent Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elmos Semiconductor position performs unexpectedly, Spirent Communications 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 Spirent Communications will offset losses from the drop in Spirent Communications' long position.| Elmos Semiconductor vs. Concurrent Technologies Plc | Elmos Semiconductor vs. TechnipFMC PLC | Elmos Semiconductor vs. Celebrus Technologies plc | Elmos Semiconductor vs. Playtech Plc |
| Spirent Communications vs. CVS Health Corp | Spirent Communications vs. Cardinal Health | Spirent Communications vs. Planet Fitness Cl | Spirent Communications vs. Federal Realty 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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