Correlation Between Elmos Semiconductor and Electronic Arts

Can any of the company-specific risk be diversified away by investing in both Elmos Semiconductor and Electronic Arts 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 Electronic Arts 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 Electronic Arts, you can compare the effects of market volatilities on Elmos Semiconductor and Electronic Arts 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 Electronic Arts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elmos Semiconductor and Electronic Arts.

Diversification Opportunities for Elmos Semiconductor and Electronic Arts

-0.43

Correlation Coefficient

Elmos Semiconductor  Electronic Arts

Very good diversification

The 3 months correlation between Elmos and Electronic is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Elmos Semiconductor SE and Electronic Arts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronic Arts 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 Electronic Arts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electronic Arts has no effect on the direction of Elmos Semiconductor i.e., Elmos Semiconductor and Electronic Arts go up and down completely randomly.

Pair Corralation between Elmos Semiconductor and Electronic Arts

Assuming the 90 days trading horizon Elmos Semiconductor SE is expected to generate 3.25 times more return on investment than Electronic Arts. However, Elmos Semiconductor is 3.25 times more volatile than Electronic Arts. It trades about 0.11 of its potential returns per unit of risk. Electronic Arts is currently generating about -0.03 per unit of risk. If you would invest  6,275  in Elmos Semiconductor SE on October 20, 2024 and sell it today you would earn a total of  1,325  from holding Elmos Semiconductor SE or generate 21.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Elmos Semiconductor SE  vs.  Electronic Arts

Elmos Semiconductor

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Elmos Semiconductor SE are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Elmos Semiconductor unveiled solid returns over the last few months and may actually be approaching a breakup point.

Electronic Arts

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Electronic Arts has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Electronic Arts is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Elmos Semiconductor and Electronic Arts

The main advantage of trading using opposite Elmos Semiconductor and Electronic Arts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elmos Semiconductor position performs unexpectedly, Electronic Arts 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 Electronic Arts will offset losses from the drop in Electronic Arts' long position.

The idea behind Elmos Semiconductor SE and Electronic Arts 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.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.