Correlation Between BOSTON BEER and ELMOS SEMICONDUCTOR

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

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

Diversification Opportunities for BOSTON BEER and ELMOS SEMICONDUCTOR

0.28

Correlation Coefficient

BOSTON BEER  ELMOS SEMICONDUCTOR

Modest diversification

The 3 months correlation between BOSTON and ELMOS is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding BOSTON BEER A and ELMOS SEMICONDUCTOR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ELMOS SEMICONDUCTOR and BOSTON BEER 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 BOSTON BEER A 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 BOSTON BEER i.e., BOSTON BEER and ELMOS SEMICONDUCTOR go up and down completely randomly.

Pair Corralation between BOSTON BEER and ELMOS SEMICONDUCTOR

Assuming the 90 days trading horizon BOSTON BEER A is expected to under-perform the ELMOS SEMICONDUCTOR. But the stock apears to be less risky and, when comparing its historical volatility, BOSTON BEER A is 1.47 times less risky than ELMOS SEMICONDUCTOR. The stock trades about -0.19 of its potential returns per unit of risk. The ELMOS SEMICONDUCTOR is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  6,860  in ELMOS SEMICONDUCTOR on December 30, 2024 and sell it today you would lose (690.00) from holding ELMOS SEMICONDUCTOR or give up 10.06% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

BOSTON BEER A   vs.  ELMOS SEMICONDUCTOR

BOSTON BEER A

Risk-Adjusted Performance

Very Weak

Over the last 90 days BOSTON BEER A has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

ELMOS SEMICONDUCTOR

Risk-Adjusted Performance

Very Weak

Over the last 90 days ELMOS SEMICONDUCTOR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with BOSTON BEER and ELMOS SEMICONDUCTOR

The main advantage of trading using opposite BOSTON BEER and ELMOS SEMICONDUCTOR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BOSTON BEER 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 BOSTON BEER A 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.