Correlation Between GVS SPA and Elmos Semiconductor

Can any of the company-specific risk be diversified away by investing in both GVS SPA and Elmos Semiconductor 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 GVS SPA and Elmos Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GVS SPA and Elmos Semiconductor SE, you can compare the effects of market volatilities on GVS SPA and Elmos Semiconductor 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 GVS SPA with a short position of Elmos Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of GVS SPA and Elmos Semiconductor.

Diversification Opportunities for GVS SPA and Elmos Semiconductor

-0.12

Correlation Coefficient

GVS SPA  Elmos Semiconductor

Good diversification

The 3 months correlation between GVS and Elmos is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding GVS SPA and Elmos Semiconductor SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elmos Semiconductor and GVS SPA 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 GVS SPA are associated (or correlated) with Elmos Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elmos Semiconductor has no effect on the direction of GVS SPA i.e., GVS SPA and Elmos Semiconductor go up and down completely randomly.

Pair Corralation between GVS SPA and Elmos Semiconductor

Assuming the 90 days horizon GVS SPA is expected to generate 11.58 times less return on investment than Elmos Semiconductor. But when comparing it to its historical volatility, GVS SPA is 1.51 times less risky than Elmos Semiconductor. It trades about 0.0 of its potential returns per unit of risk. Elmos Semiconductor SE is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  6,830  in Elmos Semiconductor SE on December 20, 2024 and sell it today you would earn a total of  140.00  from holding Elmos Semiconductor SE or generate 2.05% return on investment over 90 days.

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

GVS SPA  vs.  Elmos Semiconductor SE

GVS SPA

Risk-Adjusted Performance

Very Weak

Over the last 90 days GVS SPA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, GVS SPA is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Elmos Semiconductor

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Elmos Semiconductor SE are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Elmos Semiconductor is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with GVS SPA and Elmos Semiconductor

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

The idea behind GVS SPA and Elmos Semiconductor SE 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.