Correlation Between ELMOS SEMICONDUCTOR and M/I Homes

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

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

Diversification Opportunities for ELMOS SEMICONDUCTOR and M/I Homes

-0.22

Correlation Coefficient

ELMOS SEMICONDUCTOR  M/I Homes

Very good diversification

The 3 months correlation between ELMOS and M/I is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding ELMOS SEMICONDUCTOR and MI Homes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on M/I Homes and ELMOS SEMICONDUCTOR 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 ELMOS SEMICONDUCTOR are associated (or correlated) with M/I Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of M/I Homes has no effect on the direction of ELMOS SEMICONDUCTOR i.e., ELMOS SEMICONDUCTOR and M/I Homes go up and down completely randomly.

Pair Corralation between ELMOS SEMICONDUCTOR and M/I Homes

Assuming the 90 days trading horizon ELMOS SEMICONDUCTOR is expected to under-perform the M/I Homes. In addition to that, ELMOS SEMICONDUCTOR is 1.39 times more volatile than MI Homes. It trades about -0.12 of its total potential returns per unit of risk. MI Homes is currently generating about 0.07 per unit of volatility. If you would invest  14,295  in MI Homes on August 31, 2024 and sell it today you would earn a total of  1,380  from holding MI Homes or generate 9.65% return on investment over 90 days.

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

ELMOS SEMICONDUCTOR  vs.  MI Homes

ELMOS SEMICONDUCTOR

Risk-Adjusted Performance

0 of 100

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 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 December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

M/I Homes

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MI Homes are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, M/I Homes may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with ELMOS SEMICONDUCTOR and M/I Homes

The main advantage of trading using opposite ELMOS SEMICONDUCTOR and M/I Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ELMOS SEMICONDUCTOR position performs unexpectedly, M/I Homes 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 M/I Homes will offset losses from the drop in M/I Homes' long position.

The idea behind ELMOS SEMICONDUCTOR and MI Homes 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.