Correlation Between ELMOS SEMICONDUCTOR and Microsoft
Can any of the company-specific risk be diversified away by investing in both ELMOS SEMICONDUCTOR and Microsoft 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 Microsoft into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ELMOS SEMICONDUCTOR and Microsoft, you can compare the effects of market volatilities on ELMOS SEMICONDUCTOR and Microsoft 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 Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of ELMOS SEMICONDUCTOR and Microsoft.
Diversification Opportunities for ELMOS SEMICONDUCTOR and Microsoft
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ELMOS and Microsoft is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding ELMOS SEMICONDUCTOR and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft 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 Microsoft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microsoft has no effect on the direction of ELMOS SEMICONDUCTOR i.e., ELMOS SEMICONDUCTOR and Microsoft go up and down completely randomly.
Pair Corralation between ELMOS SEMICONDUCTOR and Microsoft
Assuming the 90 days trading horizon ELMOS SEMICONDUCTOR is expected to under-perform the Microsoft. In addition to that, ELMOS SEMICONDUCTOR is 2.13 times more volatile than Microsoft. It trades about -0.12 of its total potential returns per unit of risk. Microsoft is currently generating about 0.07 per unit of volatility. If you would invest 37,670 in Microsoft on August 31, 2024 and sell it today you would earn a total of 2,350 from holding Microsoft or generate 6.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ELMOS SEMICONDUCTOR vs. Microsoft
Performance |
| Timeline |
| ELMOS SEMICONDUCTOR |
| Microsoft |
ELMOS SEMICONDUCTOR and Microsoft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ELMOS SEMICONDUCTOR and Microsoft
The main advantage of trading using opposite ELMOS SEMICONDUCTOR and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ELMOS SEMICONDUCTOR position performs unexpectedly, Microsoft 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 Microsoft will offset losses from the drop in Microsoft's long position.| ELMOS SEMICONDUCTOR vs. Treasury Wine Estates | ELMOS SEMICONDUCTOR vs. Spirent Communications plc | ELMOS SEMICONDUCTOR vs. Calibre Mining Corp | ELMOS SEMICONDUCTOR vs. SK TELECOM TDADR |
| Microsoft vs. CN MODERN DAIRY | Microsoft vs. Cardinal Health | Microsoft vs. Cal Maine Foods | Microsoft vs. Astral Foods Limited |
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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