Correlation Between AAC TECHNOLOGHLDGADR and ELMOS SEMICONDUCTOR
Can any of the company-specific risk be diversified away by investing in both AAC TECHNOLOGHLDGADR and ELMOS SEMICONDUCTOR 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 AAC TECHNOLOGHLDGADR and ELMOS SEMICONDUCTOR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AAC TECHNOLOGHLDGADR and ELMOS SEMICONDUCTOR, you can compare the effects of market volatilities on AAC TECHNOLOGHLDGADR and ELMOS SEMICONDUCTOR 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 AAC TECHNOLOGHLDGADR with a short position of ELMOS SEMICONDUCTOR. Check out your portfolio center. Please also check ongoing floating volatility patterns of AAC TECHNOLOGHLDGADR and ELMOS SEMICONDUCTOR.
Diversification Opportunities for AAC TECHNOLOGHLDGADR and ELMOS SEMICONDUCTOR
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AAC and ELMOS is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding AAC TECHNOLOGHLDGADR and ELMOS SEMICONDUCTOR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ELMOS SEMICONDUCTOR and AAC TECHNOLOGHLDGADR 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 AAC TECHNOLOGHLDGADR are associated (or correlated) with ELMOS SEMICONDUCTOR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ELMOS SEMICONDUCTOR has no effect on the direction of AAC TECHNOLOGHLDGADR i.e., AAC TECHNOLOGHLDGADR and ELMOS SEMICONDUCTOR go up and down completely randomly.
Pair Corralation between AAC TECHNOLOGHLDGADR and ELMOS SEMICONDUCTOR
Assuming the 90 days horizon AAC TECHNOLOGHLDGADR is expected to generate 1.12 times more return on investment than ELMOS SEMICONDUCTOR. However, AAC TECHNOLOGHLDGADR is 1.12 times more volatile than ELMOS SEMICONDUCTOR. It trades about 0.14 of its potential returns per unit of risk. ELMOS SEMICONDUCTOR is currently generating about 0.01 per unit of risk. If you would invest 284.00 in AAC TECHNOLOGHLDGADR on November 3, 2024 and sell it today you would earn a total of 190.00 from holding AAC TECHNOLOGHLDGADR or generate 66.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AAC TECHNOLOGHLDGADR vs. ELMOS SEMICONDUCTOR
Performance |
| Timeline |
| AAC TECHNOLOGHLDGADR |
| ELMOS SEMICONDUCTOR |
AAC TECHNOLOGHLDGADR and ELMOS SEMICONDUCTOR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AAC TECHNOLOGHLDGADR and ELMOS SEMICONDUCTOR
The main advantage of trading using opposite AAC TECHNOLOGHLDGADR and ELMOS SEMICONDUCTOR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AAC TECHNOLOGHLDGADR position performs unexpectedly, ELMOS SEMICONDUCTOR 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 ELMOS SEMICONDUCTOR will offset losses from the drop in ELMOS SEMICONDUCTOR's long position.| AAC TECHNOLOGHLDGADR vs. MARKET VECTR RETAIL | AAC TECHNOLOGHLDGADR vs. Caseys General Stores | AAC TECHNOLOGHLDGADR vs. National Retail Properties | AAC TECHNOLOGHLDGADR vs. Northern Data AG |
| ELMOS SEMICONDUCTOR vs. Constellation Software | ELMOS SEMICONDUCTOR vs. Alfa Financial Software | ELMOS SEMICONDUCTOR vs. Kingdee International Software | ELMOS SEMICONDUCTOR vs. MUTUIONLINE |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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