Correlation Between Broadridge Financial and ELMOS SEMICONDUCTOR

Can any of the company-specific risk be diversified away by investing in both Broadridge Financial 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 Broadridge Financial and ELMOS SEMICONDUCTOR into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Broadridge Financial Solutions and ELMOS SEMICONDUCTOR, you can compare the effects of market volatilities on Broadridge Financial 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 Broadridge Financial with a short position of ELMOS SEMICONDUCTOR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Broadridge Financial and ELMOS SEMICONDUCTOR.

Diversification Opportunities for Broadridge Financial and ELMOS SEMICONDUCTOR

-0.05

Correlation Coefficient

Broadridge Financial  ELMOS SEMICONDUCTOR

Good diversification

The 3 months correlation between Broadridge and ELMOS is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Broadridge Financial Solutions and ELMOS SEMICONDUCTOR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ELMOS SEMICONDUCTOR and Broadridge Financial 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 Broadridge Financial Solutions 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 Broadridge Financial i.e., Broadridge Financial and ELMOS SEMICONDUCTOR go up and down completely randomly.

Pair Corralation between Broadridge Financial and ELMOS SEMICONDUCTOR

Assuming the 90 days horizon Broadridge Financial Solutions is expected to generate 0.39 times more return on investment than ELMOS SEMICONDUCTOR. However, Broadridge Financial Solutions is 2.56 times less risky than ELMOS SEMICONDUCTOR. It trades about 0.19 of its potential returns per unit of risk. ELMOS SEMICONDUCTOR is currently generating about 0.02 per unit of risk. If you would invest  18,925  in Broadridge Financial Solutions on September 15, 2024 and sell it today you would earn a total of  3,187  from holding Broadridge Financial Solutions or generate 16.84% return on investment over 90 days.

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

Broadridge Financial Solutions  vs.  ELMOS SEMICONDUCTOR

Broadridge Financial

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Broadridge Financial Solutions are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Broadridge Financial reported solid returns over the last few months and may actually be approaching a breakup point.

ELMOS SEMICONDUCTOR

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ELMOS SEMICONDUCTOR are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, ELMOS SEMICONDUCTOR is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Broadridge Financial and ELMOS SEMICONDUCTOR

The main advantage of trading using opposite Broadridge Financial and ELMOS SEMICONDUCTOR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Broadridge Financial 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 Broadridge Financial Solutions and ELMOS SEMICONDUCTOR 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.