Correlation Between Ebro Foods and Elmos Semiconductor
Can any of the company-specific risk be diversified away by investing in both Ebro Foods 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 Ebro Foods and Elmos Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ebro Foods and Elmos Semiconductor SE, you can compare the effects of market volatilities on Ebro Foods 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 Ebro Foods with a short position of Elmos Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ebro Foods and Elmos Semiconductor.
Diversification Opportunities for Ebro Foods and Elmos Semiconductor
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ebro and Elmos is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Ebro Foods and Elmos Semiconductor SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elmos Semiconductor and Ebro Foods 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 Ebro Foods 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 Ebro Foods i.e., Ebro Foods and Elmos Semiconductor go up and down completely randomly.
Pair Corralation between Ebro Foods and Elmos Semiconductor
Assuming the 90 days trading horizon Ebro Foods is expected to under-perform the Elmos Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, Ebro Foods is 5.69 times less risky than Elmos Semiconductor. The stock trades about -0.08 of its potential returns per unit of risk. The Elmos Semiconductor SE is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 6,098 in Elmos Semiconductor SE on August 27, 2024 and sell it today you would earn a total of 127.00 from holding Elmos Semiconductor SE or generate 2.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ebro Foods vs. Elmos Semiconductor SE
Performance |
| Timeline |
| Ebro Foods |
| Elmos Semiconductor |
Ebro Foods and Elmos Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ebro Foods and Elmos Semiconductor
The main advantage of trading using opposite Ebro Foods and Elmos Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ebro Foods 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.| Ebro Foods vs. Roadside Real Estate | Ebro Foods vs. International Biotechnology Trust | Ebro Foods vs. Broadridge Financial Solutions | Ebro Foods vs. Norman Broadbent Plc |
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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