Correlation Between Amazing Microelectronic and Elan Microelectronics
Can any of the company-specific risk be diversified away by investing in both Amazing Microelectronic 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 Amazing Microelectronic and Elan Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazing Microelectronic and Elan Microelectronics Corp, you can compare the effects of market volatilities on Amazing Microelectronic 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 Amazing Microelectronic with a short position of Elan Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazing Microelectronic and Elan Microelectronics.
Diversification Opportunities for Amazing Microelectronic and Elan Microelectronics
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Amazing and Elan is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Amazing Microelectronic and Elan Microelectronics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elan Microelectronics and Amazing Microelectronic 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 Amazing Microelectronic 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 Amazing Microelectronic i.e., Amazing Microelectronic and Elan Microelectronics go up and down completely randomly.
Pair Corralation between Amazing Microelectronic and Elan Microelectronics
Assuming the 90 days trading horizon Amazing Microelectronic is expected to under-perform the Elan Microelectronics. But the stock apears to be less risky and, when comparing its historical volatility, Amazing Microelectronic is 1.1 times less risky than Elan Microelectronics. The stock trades about -0.07 of its potential returns per unit of risk. The Elan Microelectronics Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 14,750 in Elan Microelectronics Corp on November 27, 2024 and sell it today you would earn a total of 1,250 from holding Elan Microelectronics Corp or generate 8.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amazing Microelectronic vs. Elan Microelectronics Corp
Performance |
| Timeline |
| Amazing Microelectronic |
| Elan Microelectronics |
Amazing Microelectronic and Elan Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazing Microelectronic and Elan Microelectronics
The main advantage of trading using opposite Amazing Microelectronic and Elan Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazing Microelectronic 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.The idea behind Amazing Microelectronic and Elan Microelectronics Corp 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
Other Complementary Tools
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Commodity Directory Find actively traded commodities issued by global exchanges |