Correlation Between Elan Microelectronics and WIN Semiconductors
Can any of the company-specific risk be diversified away by investing in both Elan Microelectronics and WIN Semiconductors 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 WIN Semiconductors 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 WIN Semiconductors, you can compare the effects of market volatilities on Elan Microelectronics and WIN Semiconductors 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 WIN Semiconductors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elan Microelectronics and WIN Semiconductors.
Diversification Opportunities for Elan Microelectronics and WIN Semiconductors
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Elan and WIN is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Elan Microelectronics Corp and WIN Semiconductors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WIN Semiconductors 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 WIN Semiconductors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WIN Semiconductors has no effect on the direction of Elan Microelectronics i.e., Elan Microelectronics and WIN Semiconductors go up and down completely randomly.
Pair Corralation between Elan Microelectronics and WIN Semiconductors
Assuming the 90 days trading horizon Elan Microelectronics Corp is expected to under-perform the WIN Semiconductors. But the stock apears to be less risky and, when comparing its historical volatility, Elan Microelectronics Corp is 1.7 times less risky than WIN Semiconductors. The stock trades about -0.2 of its potential returns per unit of risk. The WIN Semiconductors is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 10,700 in WIN Semiconductors on November 5, 2024 and sell it today you would lose (300.00) from holding WIN Semiconductors or give up 2.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elan Microelectronics Corp vs. WIN Semiconductors
Performance |
| Timeline |
| Elan Microelectronics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
| WIN Semiconductors |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Elan Microelectronics and WIN Semiconductors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elan Microelectronics and WIN Semiconductors
The main advantage of trading using opposite Elan Microelectronics and WIN Semiconductors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elan Microelectronics position performs unexpectedly, WIN Semiconductors 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 WIN Semiconductors will offset losses from the drop in WIN Semiconductors' long position.The idea behind Elan Microelectronics Corp and WIN Semiconductors 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.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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
Other Complementary Tools
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |