Correlation Between Elan Microelectronics and Ambassador Hotel
Can any of the company-specific risk be diversified away by investing in both Elan Microelectronics and Ambassador Hotel 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 Ambassador Hotel 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 Ambassador Hotel, you can compare the effects of market volatilities on Elan Microelectronics and Ambassador Hotel 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 Ambassador Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elan Microelectronics and Ambassador Hotel.
Diversification Opportunities for Elan Microelectronics and Ambassador Hotel
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Elan and Ambassador is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Elan Microelectronics Corp and Ambassador Hotel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambassador Hotel 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 Ambassador Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambassador Hotel has no effect on the direction of Elan Microelectronics i.e., Elan Microelectronics and Ambassador Hotel go up and down completely randomly.
Pair Corralation between Elan Microelectronics and Ambassador Hotel
Assuming the 90 days trading horizon Elan Microelectronics Corp is expected to under-perform the Ambassador Hotel. But the stock apears to be less risky and, when comparing its historical volatility, Elan Microelectronics Corp is 1.08 times less risky than Ambassador Hotel. The stock trades about -0.05 of its potential returns per unit of risk. The Ambassador Hotel is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 5,940 in Ambassador Hotel on August 29, 2024 and sell it today you would lose (10.00) from holding Ambassador Hotel or give up 0.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elan Microelectronics Corp vs. Ambassador Hotel
Performance |
| Timeline |
| Elan Microelectronics |
| Ambassador Hotel |
Elan Microelectronics and Ambassador Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elan Microelectronics and Ambassador Hotel
The main advantage of trading using opposite Elan Microelectronics and Ambassador Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elan Microelectronics position performs unexpectedly, Ambassador Hotel 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 Ambassador Hotel will offset losses from the drop in Ambassador Hotel'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 |
| Ambassador Hotel vs. Yulon Finance Corp | Ambassador Hotel vs. Taiwan Secom Co | Ambassador Hotel vs. Pou Chen Corp | Ambassador Hotel vs. Great Wall Enterprise |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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