Correlation Between ELMOS SEMICONDUCTOR and LIFENET INSURANCE

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

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

Diversification Opportunities for ELMOS SEMICONDUCTOR and LIFENET INSURANCE

-0.42

Correlation Coefficient

ELMOS SEMICONDUCTOR  LIFENET INSURANCE

Very good diversification

The 3 months correlation between ELMOS and LIFENET is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding ELMOS SEMICONDUCTOR and LIFENET INSURANCE CO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIFENET INSURANCE 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 LIFENET INSURANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LIFENET INSURANCE has no effect on the direction of ELMOS SEMICONDUCTOR i.e., ELMOS SEMICONDUCTOR and LIFENET INSURANCE go up and down completely randomly.

Pair Corralation between ELMOS SEMICONDUCTOR and LIFENET INSURANCE

Assuming the 90 days trading horizon ELMOS SEMICONDUCTOR is expected to generate 1.74 times more return on investment than LIFENET INSURANCE. However, ELMOS SEMICONDUCTOR is 1.74 times more volatile than LIFENET INSURANCE CO. It trades about 0.32 of its potential returns per unit of risk. LIFENET INSURANCE CO is currently generating about -0.42 per unit of risk. If you would invest  5,940  in ELMOS SEMICONDUCTOR on October 5, 2024 and sell it today you would earn a total of  830.00  from holding ELMOS SEMICONDUCTOR or generate 13.97% return on investment over 90 days.

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

ELMOS SEMICONDUCTOR  vs.  LIFENET INSURANCE CO

ELMOS SEMICONDUCTOR

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days ELMOS SEMICONDUCTOR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather uncertain technical and fundamental indicators, ELMOS SEMICONDUCTOR may actually be approaching a critical reversion point that can send shares even higher in February 2025.

LIFENET INSURANCE

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days LIFENET INSURANCE CO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly unsteady basic indicators, LIFENET INSURANCE may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with ELMOS SEMICONDUCTOR and LIFENET INSURANCE

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

The idea behind ELMOS SEMICONDUCTOR and LIFENET INSURANCE CO 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.