Correlation Between Hi Sharp and Elan Microelectronics

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Can any of the company-specific risk be diversified away by investing in both Hi Sharp and Elan Microelectronics 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 Hi Sharp and Elan Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hi Sharp Electronics and Elan Microelectronics Corp, you can compare the effects of market volatilities on Hi Sharp and Elan Microelectronics 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 Hi Sharp with a short position of Elan Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hi Sharp and Elan Microelectronics.

Diversification Opportunities for Hi Sharp and Elan Microelectronics

-0.46
  Correlation Coefficient

Very good diversification

The 3 months correlation between 3128 and Elan is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Hi Sharp Electronics and Elan Microelectronics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elan Microelectronics and Hi Sharp 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 Hi Sharp Electronics are associated (or correlated) with Elan Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elan Microelectronics has no effect on the direction of Hi Sharp i.e., Hi Sharp and Elan Microelectronics go up and down completely randomly.

Pair Corralation between Hi Sharp and Elan Microelectronics

Assuming the 90 days trading horizon Hi Sharp is expected to generate 9.9 times less return on investment than Elan Microelectronics. But when comparing it to its historical volatility, Hi Sharp Electronics is 2.13 times less risky than Elan Microelectronics. It trades about 0.02 of its potential returns per unit of risk. Elan Microelectronics Corp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  14,850  in Elan Microelectronics Corp on September 16, 2024 and sell it today you would earn a total of  600.00  from holding Elan Microelectronics Corp or generate 4.04% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Hi Sharp Electronics  vs.  Elan Microelectronics Corp

 Performance 
       Timeline  
Hi Sharp Electronics 

Risk-Adjusted Performance

0 of 100

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

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Elan Microelectronics Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Hi Sharp and Elan Microelectronics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Hi Sharp and Elan Microelectronics

The main advantage of trading using opposite Hi Sharp and Elan Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hi Sharp position performs unexpectedly, Elan Microelectronics 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 Elan Microelectronics will offset losses from the drop in Elan Microelectronics' long position.
The idea behind Hi Sharp Electronics and Elan Microelectronics Corp 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.

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