Correlation Between ELMOS SEMICONDUCTOR and Broadridge Financial

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

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

Diversification Opportunities for ELMOS SEMICONDUCTOR and Broadridge Financial

-0.05

Correlation Coefficient

ELMOS SEMICONDUCTOR  Broadridge Financial

Good diversification

The 3 months correlation between ELMOS and Broadridge is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding ELMOS SEMICONDUCTOR and Broadridge Financial Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broadridge Financial 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 Broadridge Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Broadridge Financial has no effect on the direction of ELMOS SEMICONDUCTOR i.e., ELMOS SEMICONDUCTOR and Broadridge Financial go up and down completely randomly.

Pair Corralation between ELMOS SEMICONDUCTOR and Broadridge Financial

Assuming the 90 days trading horizon ELMOS SEMICONDUCTOR is expected to generate 3.25 times less return on investment than Broadridge Financial. In addition to that, ELMOS SEMICONDUCTOR is 2.56 times more volatile than Broadridge Financial Solutions. It trades about 0.02 of its total potential returns per unit of risk. Broadridge Financial Solutions is currently generating about 0.19 per unit of volatility. 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

ELMOS SEMICONDUCTOR  vs.  Broadridge Financial Solutions

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.

Broadridge Financial

Risk-Adjusted Performance

15 of 100

Good

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.

Pair Trading with ELMOS SEMICONDUCTOR and Broadridge Financial

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

The idea behind ELMOS SEMICONDUCTOR and Broadridge Financial Solutions 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.