Correlation Between Elan Microelectronics and Amazing Microelectronic
Can any of the company-specific risk be diversified away by investing in both Elan Microelectronics and Amazing Microelectronic 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 Amazing Microelectronic 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 Amazing Microelectronic, you can compare the effects of market volatilities on Elan Microelectronics and Amazing Microelectronic 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 Amazing Microelectronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elan Microelectronics and Amazing Microelectronic.
Diversification Opportunities for Elan Microelectronics and Amazing Microelectronic
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Elan and Amazing is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Elan Microelectronics Corp and Amazing Microelectronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazing Microelectronic 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 Amazing Microelectronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazing Microelectronic has no effect on the direction of Elan Microelectronics i.e., Elan Microelectronics and Amazing Microelectronic go up and down completely randomly.
Pair Corralation between Elan Microelectronics and Amazing Microelectronic
Assuming the 90 days trading horizon Elan Microelectronics Corp is expected to generate 1.56 times more return on investment than Amazing Microelectronic. However, Elan Microelectronics is 1.56 times more volatile than Amazing Microelectronic. It trades about 0.02 of its potential returns per unit of risk. Amazing Microelectronic is currently generating about -0.12 per unit of risk. If you would invest 14,600 in Elan Microelectronics Corp on September 1, 2024 and sell it today you would earn a total of 50.00 from holding Elan Microelectronics Corp or generate 0.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elan Microelectronics Corp vs. Amazing Microelectronic
Performance |
| Timeline |
| Elan Microelectronics |
| Amazing Microelectronic |
Elan Microelectronics and Amazing Microelectronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elan Microelectronics and Amazing Microelectronic
The main advantage of trading using opposite Elan Microelectronics and Amazing Microelectronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elan Microelectronics position performs unexpectedly, Amazing Microelectronic 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 Amazing Microelectronic will offset losses from the drop in Amazing Microelectronic's long position.The idea behind Elan Microelectronics Corp and Amazing Microelectronic 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.
| Amazing Microelectronic vs. United Microelectronics | Amazing Microelectronic vs. Winbond Electronics 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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