Correlation Between Elan Microelectronics and I Jang

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

Diversification Opportunities for Elan Microelectronics and I Jang

0.36

Correlation Coefficient

Elan Microelectronics  I Jang

Weak diversification

The 3 months correlation between Elan and 8342 is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Elan Microelectronics Corp and I Jang Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on I Jang Industrial 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 I Jang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of I Jang Industrial has no effect on the direction of Elan Microelectronics i.e., Elan Microelectronics and I Jang go up and down completely randomly.

Pair Corralation between Elan Microelectronics and I Jang

Assuming the 90 days trading horizon Elan Microelectronics is expected to generate 1.67 times less return on investment than I Jang. In addition to that, Elan Microelectronics is 1.69 times more volatile than I Jang Industrial. It trades about 0.01 of its total potential returns per unit of risk. I Jang Industrial is currently generating about 0.02 per unit of volatility. If you would invest  8,700  in I Jang Industrial on December 4, 2024 and sell it today you would earn a total of  90.00  from holding I Jang Industrial or generate 1.03% 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.  I Jang Industrial

Elan Microelectronics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Elan Microelectronics Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Elan Microelectronics is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

I Jang Industrial

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in I Jang Industrial are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, I Jang is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Elan Microelectronics and I Jang

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

The idea behind Elan Microelectronics Corp and I Jang Industrial 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.