Correlation Between Elan Microelectronics and Dynamic Medical
Can any of the company-specific risk be diversified away by investing in both Elan Microelectronics and Dynamic Medical 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 Dynamic Medical 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 Dynamic Medical Technologies, you can compare the effects of market volatilities on Elan Microelectronics and Dynamic Medical 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 Dynamic Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elan Microelectronics and Dynamic Medical.
Diversification Opportunities for Elan Microelectronics and Dynamic Medical
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Elan and Dynamic is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Elan Microelectronics Corp and Dynamic Medical Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynamic Medical 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 Dynamic Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynamic Medical Tech has no effect on the direction of Elan Microelectronics i.e., Elan Microelectronics and Dynamic Medical go up and down completely randomly.
Pair Corralation between Elan Microelectronics and Dynamic Medical
Assuming the 90 days trading horizon Elan Microelectronics Corp is expected to under-perform the Dynamic Medical. In addition to that, Elan Microelectronics is 1.43 times more volatile than Dynamic Medical Technologies. It trades about -0.01 of its total potential returns per unit of risk. Dynamic Medical Technologies is currently generating about 0.01 per unit of volatility. If you would invest 8,930 in Dynamic Medical Technologies on October 26, 2024 and sell it today you would earn a total of 60.00 from holding Dynamic Medical Technologies or generate 0.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elan Microelectronics Corp vs. Dynamic Medical Technologies
Performance |
| Timeline |
| Elan Microelectronics |
| Dynamic Medical Tech |
Elan Microelectronics and Dynamic Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elan Microelectronics and Dynamic Medical
The main advantage of trading using opposite Elan Microelectronics and Dynamic Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elan Microelectronics position performs unexpectedly, Dynamic Medical 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 Dynamic Medical will offset losses from the drop in Dynamic Medical's long position.The idea behind Elan Microelectronics Corp and Dynamic Medical Technologies 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.
| Dynamic Medical vs. Elan Microelectronics Corp | Dynamic Medical vs. Elite Material Co | Dynamic Medical vs. Goldsun Building Materials | Dynamic Medical vs. Insyde Software |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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