Correlation Between ELMOS SEMICONDUCTOR and HSBC Holdings
Can any of the company-specific risk be diversified away by investing in both ELMOS SEMICONDUCTOR and HSBC Holdings 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 ELMOS SEMICONDUCTOR and HSBC Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ELMOS SEMICONDUCTOR and HSBC Holdings plc, you can compare the effects of market volatilities on ELMOS SEMICONDUCTOR and HSBC Holdings 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 ELMOS SEMICONDUCTOR with a short position of HSBC Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of ELMOS SEMICONDUCTOR and HSBC Holdings.
Diversification Opportunities for ELMOS SEMICONDUCTOR and HSBC Holdings
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ELMOS and HSBC is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding ELMOS SEMICONDUCTOR and HSBC Holdings plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HSBC Holdings plc and ELMOS SEMICONDUCTOR 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 ELMOS SEMICONDUCTOR are associated (or correlated) with HSBC Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HSBC Holdings plc has no effect on the direction of ELMOS SEMICONDUCTOR i.e., ELMOS SEMICONDUCTOR and HSBC Holdings go up and down completely randomly.
Pair Corralation between ELMOS SEMICONDUCTOR and HSBC Holdings
Assuming the 90 days trading horizon ELMOS SEMICONDUCTOR is expected to generate 3.45 times more return on investment than HSBC Holdings. However, ELMOS SEMICONDUCTOR is 3.45 times more volatile than HSBC Holdings plc. It trades about 0.22 of its potential returns per unit of risk. HSBC Holdings plc is currently generating about 0.24 per unit of risk. If you would invest 6,640 in ELMOS SEMICONDUCTOR on October 25, 2024 and sell it today you would earn a total of 960.00 from holding ELMOS SEMICONDUCTOR or generate 14.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ELMOS SEMICONDUCTOR vs. HSBC Holdings plc
Performance |
| Timeline |
| ELMOS SEMICONDUCTOR |
| HSBC Holdings plc |
ELMOS SEMICONDUCTOR and HSBC Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ELMOS SEMICONDUCTOR and HSBC Holdings
The main advantage of trading using opposite ELMOS SEMICONDUCTOR and HSBC Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ELMOS SEMICONDUCTOR position performs unexpectedly, HSBC Holdings 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 HSBC Holdings will offset losses from the drop in HSBC Holdings' long position.| ELMOS SEMICONDUCTOR vs. Apple Inc | ELMOS SEMICONDUCTOR vs. Apple Inc | ELMOS SEMICONDUCTOR vs. Apple Inc | ELMOS SEMICONDUCTOR vs. Apple Inc |
| HSBC Holdings vs. ELMOS SEMICONDUCTOR | HSBC Holdings vs. PURETECH HEALTH PLC | HSBC Holdings vs. BE Semiconductor Industries | HSBC Holdings vs. Universal Health Realty |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data |