Correlation Between Elan Microelectronics and Chroma ATE
Can any of the company-specific risk be diversified away by investing in both Elan Microelectronics and Chroma ATE 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 Elan Microelectronics and Chroma ATE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elan Microelectronics Corp and Chroma ATE, you can compare the effects of market volatilities on Elan Microelectronics and Chroma ATE 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 Elan Microelectronics with a short position of Chroma ATE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elan Microelectronics and Chroma ATE.
Diversification Opportunities for Elan Microelectronics and Chroma ATE
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Elan and Chroma is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Elan Microelectronics Corp and Chroma ATE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chroma ATE and Elan Microelectronics 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 Elan Microelectronics Corp are associated (or correlated) with Chroma ATE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chroma ATE has no effect on the direction of Elan Microelectronics i.e., Elan Microelectronics and Chroma ATE go up and down completely randomly.
Pair Corralation between Elan Microelectronics and Chroma ATE
Assuming the 90 days trading horizon Elan Microelectronics is expected to generate 2.42 times less return on investment than Chroma ATE. But when comparing it to its historical volatility, Elan Microelectronics Corp is 1.59 times less risky than Chroma ATE. It trades about 0.06 of its potential returns per unit of risk. Chroma ATE is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 37,350 in Chroma ATE on August 29, 2024 and sell it today you would earn a total of 3,550 from holding Chroma ATE or generate 9.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elan Microelectronics Corp vs. Chroma ATE
Performance |
| Timeline |
| Elan Microelectronics |
| Chroma ATE |
Elan Microelectronics and Chroma ATE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elan Microelectronics and Chroma ATE
The main advantage of trading using opposite Elan Microelectronics and Chroma ATE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elan Microelectronics position performs unexpectedly, Chroma ATE 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 Chroma ATE will offset losses from the drop in Chroma ATE's long position.| Elan Microelectronics vs. Novatek Microelectronics Corp | Elan Microelectronics vs. Sitronix Technology Corp | Elan Microelectronics vs. Global Unichip Corp | Elan Microelectronics vs. Holtek Semiconductor |
| Chroma ATE vs. Novatek Microelectronics Corp | Chroma ATE vs. Sitronix Technology Corp | Chroma ATE vs. Elan Microelectronics Corp | Chroma ATE vs. Global Unichip Corp |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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