Correlation Between ELMOS SEMICONDUCTOR and LEGAL GENERAL
Can any of the company-specific risk be diversified away by investing in both ELMOS SEMICONDUCTOR and LEGAL GENERAL 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 LEGAL GENERAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ELMOS SEMICONDUCTOR and LEGAL GENERAL, you can compare the effects of market volatilities on ELMOS SEMICONDUCTOR and LEGAL GENERAL 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 LEGAL GENERAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of ELMOS SEMICONDUCTOR and LEGAL GENERAL.
Diversification Opportunities for ELMOS SEMICONDUCTOR and LEGAL GENERAL
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between ELMOS and LEGAL is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding ELMOS SEMICONDUCTOR and LEGAL GENERAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LEGAL GENERAL 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 LEGAL GENERAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LEGAL GENERAL has no effect on the direction of ELMOS SEMICONDUCTOR i.e., ELMOS SEMICONDUCTOR and LEGAL GENERAL go up and down completely randomly.
Pair Corralation between ELMOS SEMICONDUCTOR and LEGAL GENERAL
Assuming the 90 days trading horizon ELMOS SEMICONDUCTOR is expected to generate 1.99 times more return on investment than LEGAL GENERAL. However, ELMOS SEMICONDUCTOR is 1.99 times more volatile than LEGAL GENERAL. It trades about 0.03 of its potential returns per unit of risk. LEGAL GENERAL is currently generating about 0.01 per unit of risk. If you would invest 6,015 in ELMOS SEMICONDUCTOR on October 12, 2024 and sell it today you would earn a total of 1,825 from holding ELMOS SEMICONDUCTOR or generate 30.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ELMOS SEMICONDUCTOR vs. LEGAL GENERAL
Performance |
| Timeline |
| ELMOS SEMICONDUCTOR |
| LEGAL GENERAL |
ELMOS SEMICONDUCTOR and LEGAL GENERAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ELMOS SEMICONDUCTOR and LEGAL GENERAL
The main advantage of trading using opposite ELMOS SEMICONDUCTOR and LEGAL GENERAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ELMOS SEMICONDUCTOR position performs unexpectedly, LEGAL GENERAL 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 LEGAL GENERAL will offset losses from the drop in LEGAL GENERAL's long position.| ELMOS SEMICONDUCTOR vs. NTG Nordic Transport | ELMOS SEMICONDUCTOR vs. CyberArk Software | ELMOS SEMICONDUCTOR vs. VITEC SOFTWARE GROUP | ELMOS SEMICONDUCTOR vs. SCIENCE IN SPORT |
| LEGAL GENERAL vs. Fevertree Drinks PLC | LEGAL GENERAL vs. China Eastern Airlines | LEGAL GENERAL vs. Thai Beverage Public | LEGAL GENERAL vs. ELMOS SEMICONDUCTOR |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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