Correlation Between Sino American and Elan Microelectronics
Can any of the company-specific risk be diversified away by investing in both Sino American and Elan Microelectronics 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 Sino American and Elan Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sino American Silicon Products and Elan Microelectronics Corp, you can compare the effects of market volatilities on Sino American and Elan Microelectronics 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 Sino American with a short position of Elan Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sino American and Elan Microelectronics.
Diversification Opportunities for Sino American and Elan Microelectronics
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sino and Elan is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Sino American Silicon Products and Elan Microelectronics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elan Microelectronics and Sino American 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 Sino American Silicon Products are associated (or correlated) with Elan Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elan Microelectronics has no effect on the direction of Sino American i.e., Sino American and Elan Microelectronics go up and down completely randomly.
Pair Corralation between Sino American and Elan Microelectronics
Assuming the 90 days trading horizon Sino American Silicon Products is expected to under-perform the Elan Microelectronics. But the stock apears to be less risky and, when comparing its historical volatility, Sino American Silicon Products is 1.11 times less risky than Elan Microelectronics. The stock trades about -0.14 of its potential returns per unit of risk. The Elan Microelectronics Corp is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 16,350 in Elan Microelectronics Corp on September 1, 2024 and sell it today you would lose (1,700) from holding Elan Microelectronics Corp or give up 10.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sino American Silicon Products vs. Elan Microelectronics Corp
Performance |
| Timeline |
| Sino American Silicon |
| Elan Microelectronics |
Sino American and Elan Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sino American and Elan Microelectronics
The main advantage of trading using opposite Sino American and Elan Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sino American position performs unexpectedly, Elan Microelectronics 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 Elan Microelectronics will offset losses from the drop in Elan Microelectronics' long position.| Sino American vs. Powertech Technology | Sino American vs. Formosa Sumco Technology | Sino American vs. Radiant Opto Electronics Corp | Sino American 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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