Correlation Between Elan Microelectronics and Turvo International

Can any of the company-specific risk be diversified away by investing in both Elan Microelectronics and Turvo International 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 Elan Microelectronics and Turvo International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Elan Microelectronics Corp and Turvo International Co, you can compare the effects of market volatilities on Elan Microelectronics and Turvo International 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 Elan Microelectronics with a short position of Turvo International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elan Microelectronics and Turvo International.

Diversification Opportunities for Elan Microelectronics and Turvo International

0.28

Correlation Coefficient

Elan Microelectronics  Turvo International

Modest diversification

The 3 months correlation between Elan and Turvo is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Elan Microelectronics Corp and Turvo International Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Turvo International and Elan Microelectronics 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 Elan Microelectronics Corp are associated (or correlated) with Turvo International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Turvo International has no effect on the direction of Elan Microelectronics i.e., Elan Microelectronics and Turvo International go up and down completely randomly.

Pair Corralation between Elan Microelectronics and Turvo International

Assuming the 90 days trading horizon Elan Microelectronics is expected to generate 1.55 times less return on investment than Turvo International. But when comparing it to its historical volatility, Elan Microelectronics Corp is 1.6 times less risky than Turvo International. It trades about 0.05 of its potential returns per unit of risk. Turvo International Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  16,800  in Turvo International Co on September 17, 2024 and sell it today you would earn a total of  1,250  from holding Turvo International Co or generate 7.44% return on investment over 90 days.

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

Elan Microelectronics Corp  vs.  Turvo International Co

Elan Microelectronics

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Elan Microelectronics Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Elan Microelectronics may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Turvo International

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Turvo International Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Turvo International may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Elan Microelectronics and Turvo International

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

The idea behind Elan Microelectronics Corp and Turvo International Co 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.

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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.