Correlation Between Elmos Semiconductor and Rheinmetall
Can any of the company-specific risk be diversified away by investing in both Elmos Semiconductor and Rheinmetall 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 Rheinmetall into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elmos Semiconductor SE and Rheinmetall AG, you can compare the effects of market volatilities on Elmos Semiconductor and Rheinmetall 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 Rheinmetall. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elmos Semiconductor and Rheinmetall.
Diversification Opportunities for Elmos Semiconductor and Rheinmetall
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Elmos and Rheinmetall is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Elmos Semiconductor SE and Rheinmetall AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rheinmetall AG 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 SE are associated (or correlated) with Rheinmetall. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rheinmetall AG has no effect on the direction of Elmos Semiconductor i.e., Elmos Semiconductor and Rheinmetall go up and down completely randomly.
Pair Corralation between Elmos Semiconductor and Rheinmetall
Assuming the 90 days trading horizon Elmos Semiconductor is expected to generate 3.04 times less return on investment than Rheinmetall. In addition to that, Elmos Semiconductor is 1.41 times more volatile than Rheinmetall AG. It trades about 0.08 of its total potential returns per unit of risk. Rheinmetall AG is currently generating about 0.36 per unit of volatility. If you would invest 50,000 in Rheinmetall AG on November 6, 2024 and sell it today you would earn a total of 25,360 from holding Rheinmetall AG or generate 50.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elmos Semiconductor SE vs. Rheinmetall AG
Performance |
| Timeline |
| Elmos Semiconductor |
| Rheinmetall AG |
Elmos Semiconductor and Rheinmetall Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elmos Semiconductor and Rheinmetall
The main advantage of trading using opposite Elmos Semiconductor and Rheinmetall positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elmos Semiconductor position performs unexpectedly, Rheinmetall 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 Rheinmetall will offset losses from the drop in Rheinmetall's long position.| Elmos Semiconductor vs. PLAY2CHILL SA ZY | Elmos Semiconductor vs. InPlay Oil Corp | Elmos Semiconductor vs. Playa Hotels Resorts | Elmos Semiconductor vs. HUTCHISON TELECOMM |
| Rheinmetall vs. International Consolidated Airlines | Rheinmetall vs. SINGAPORE AIRLINES | Rheinmetall vs. Singapore Airlines Limited | Rheinmetall vs. OPERA SOFTWARE |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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