Correlation Between Elan Microelectronics and ITE Tech
Can any of the company-specific risk be diversified away by investing in both Elan Microelectronics and ITE Tech 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 ITE Tech 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 ITE Tech, you can compare the effects of market volatilities on Elan Microelectronics and ITE Tech 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 ITE Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elan Microelectronics and ITE Tech.
Diversification Opportunities for Elan Microelectronics and ITE Tech
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Elan and ITE is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Elan Microelectronics Corp and ITE Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITE Tech 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 ITE Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITE Tech has no effect on the direction of Elan Microelectronics i.e., Elan Microelectronics and ITE Tech go up and down completely randomly.
Pair Corralation between Elan Microelectronics and ITE Tech
Assuming the 90 days trading horizon Elan Microelectronics Corp is expected to under-perform the ITE Tech. But the stock apears to be less risky and, when comparing its historical volatility, Elan Microelectronics Corp is 1.23 times less risky than ITE Tech. The stock trades about -0.03 of its potential returns per unit of risk. The ITE Tech is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 13,850 in ITE Tech on September 2, 2024 and sell it today you would earn a total of 200.00 from holding ITE Tech or generate 1.44% 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. ITE Tech
Performance |
| Timeline |
| Elan Microelectronics |
| ITE Tech |
Elan Microelectronics and ITE Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elan Microelectronics and ITE Tech
The main advantage of trading using opposite Elan Microelectronics and ITE Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elan Microelectronics position performs unexpectedly, ITE Tech 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 ITE Tech will offset losses from the drop in ITE Tech's long position.The idea behind Elan Microelectronics Corp and ITE Tech pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| ITE Tech vs. Novatek Microelectronics Corp | ITE Tech vs. Elan Microelectronics Corp | ITE Tech vs. Elite Semiconductor Memory | ITE Tech vs. Faraday Technology 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
Other Complementary Tools
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |