Correlation Between MPI and Elan Microelectronics

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both MPI 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 MPI and Elan Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MPI Corporation and Elan Microelectronics Corp, you can compare the effects of market volatilities on MPI 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 MPI with a short position of Elan Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of MPI and Elan Microelectronics.

Diversification Opportunities for MPI and Elan Microelectronics

MPIElanDiversified AwayMPIElanDiversified Away100%
0.61
  Correlation Coefficient

Poor diversification

The 3 months correlation between MPI and Elan is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding MPI Corp. and Elan Microelectronics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elan Microelectronics and MPI 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 MPI Corporation 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 MPI i.e., MPI and Elan Microelectronics go up and down completely randomly.

Pair Corralation between MPI and Elan Microelectronics

Assuming the 90 days trading horizon MPI Corporation is expected to generate 1.76 times more return on investment than Elan Microelectronics. However, MPI is 1.76 times more volatile than Elan Microelectronics Corp. It trades about 0.13 of its potential returns per unit of risk. Elan Microelectronics Corp is currently generating about 0.06 per unit of risk. If you would invest  78,500  in MPI Corporation on October 11, 2024 and sell it today you would earn a total of  20,800  from holding MPI Corporation or generate 26.5% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy98.44%
ValuesDaily Returns

MPI Corp.  vs.  Elan Microelectronics Corp

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -505101520
JavaScript chart by amCharts 3.21.156223 2458
       Timeline  
MPI Corporation 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in MPI Corporation are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, MPI showed solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan7007508008509009501,000
Elan Microelectronics 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Elan Microelectronics Corp are ranked lower than 5 (%) 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 February 2025.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan145150155160

MPI and Elan Microelectronics Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-10.36-7.76-5.16-2.560.02.75.498.2811.0713.87 0.020.040.060.080.10
JavaScript chart by amCharts 3.21.156223 2458
       Returns  

Pair Trading with MPI and Elan Microelectronics

The main advantage of trading using opposite MPI and Elan Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MPI 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 MPI Corporation 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.
Check out your portfolio center.
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.

Other Complementary Tools

Commodity Channel
Use Commodity Channel Index to analyze current equity momentum
Portfolio Center
All portfolio management and optimization tools to improve performance of your portfolios
Technical Analysis
Check basic technical indicators and analysis based on most latest market data
Insider Screener
Find insiders across different sectors to evaluate their impact on performance
My Watchlist Analysis
Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like


 

Trending Assets