Correlation Between DAIDO METAL and ELMOS SEMICONDUCTOR

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

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

Diversification Opportunities for DAIDO METAL and ELMOS SEMICONDUCTOR

0.39

Correlation Coefficient

DAIDO METAL  ELMOS SEMICONDUCTOR

Weak diversification

The 3 months correlation between DAIDO and ELMOS is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding DAIDO METAL TD and ELMOS SEMICONDUCTOR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ELMOS SEMICONDUCTOR and DAIDO METAL 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 DAIDO METAL TD 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 DAIDO METAL i.e., DAIDO METAL and ELMOS SEMICONDUCTOR go up and down completely randomly.

Pair Corralation between DAIDO METAL and ELMOS SEMICONDUCTOR

Assuming the 90 days horizon DAIDO METAL is expected to generate 2.97 times less return on investment than ELMOS SEMICONDUCTOR. But when comparing it to its historical volatility, DAIDO METAL TD is 1.82 times less risky than ELMOS SEMICONDUCTOR. It trades about 0.15 of its potential returns per unit of risk. ELMOS SEMICONDUCTOR is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  6,560  in ELMOS SEMICONDUCTOR on October 11, 2024 and sell it today you would earn a total of  1,070  from holding ELMOS SEMICONDUCTOR or generate 16.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	94.44%
Values	Daily Returns

DAIDO METAL TD  vs.  ELMOS SEMICONDUCTOR

DAIDO METAL TD

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in DAIDO METAL TD are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, DAIDO METAL is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

ELMOS SEMICONDUCTOR

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ELMOS SEMICONDUCTOR are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, ELMOS SEMICONDUCTOR exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DAIDO METAL and ELMOS SEMICONDUCTOR

The main advantage of trading using opposite DAIDO METAL and ELMOS SEMICONDUCTOR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAIDO METAL 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 DAIDO METAL TD 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.