Correlation Between Cumberland Pharmaceuticals and Elmos Semiconductor
Can any of the company-specific risk be diversified away by investing in both Cumberland Pharmaceuticals 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 Cumberland Pharmaceuticals and Elmos Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cumberland Pharmaceuticals and Elmos Semiconductor SE, you can compare the effects of market volatilities on Cumberland Pharmaceuticals 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 Cumberland Pharmaceuticals with a short position of Elmos Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cumberland Pharmaceuticals and Elmos Semiconductor.
Diversification Opportunities for Cumberland Pharmaceuticals and Elmos Semiconductor
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Cumberland and Elmos is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Cumberland Pharmaceuticals and Elmos Semiconductor SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elmos Semiconductor and Cumberland Pharmaceuticals 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 Cumberland Pharmaceuticals 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 Cumberland Pharmaceuticals i.e., Cumberland Pharmaceuticals and Elmos Semiconductor go up and down completely randomly.
Pair Corralation between Cumberland Pharmaceuticals and Elmos Semiconductor
Given the investment horizon of 90 days Cumberland Pharmaceuticals is expected to under-perform the Elmos Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, Cumberland Pharmaceuticals is 1.78 times less risky than Elmos Semiconductor. The stock trades about -0.01 of its potential returns per unit of risk. The Elmos Semiconductor SE is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,624 in Elmos Semiconductor SE on September 4, 2024 and sell it today you would earn a total of 6,299 from holding Elmos Semiconductor SE or generate 240.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Cumberland Pharmaceuticals vs. Elmos Semiconductor SE
Performance |
| Timeline |
| Cumberland Pharmaceuticals |
| Elmos Semiconductor |
Cumberland Pharmaceuticals and Elmos Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cumberland Pharmaceuticals and Elmos Semiconductor
The main advantage of trading using opposite Cumberland Pharmaceuticals and Elmos Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cumberland Pharmaceuticals 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.The idea behind Cumberland Pharmaceuticals and Elmos Semiconductor SE 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.
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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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