Correlation Between ELMOS SEMICONDUCTOR and LANDSEA HOMES

Can any of the company-specific risk be diversified away by investing in both ELMOS SEMICONDUCTOR and LANDSEA 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 LANDSEA 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 LANDSEA HOMES P, you can compare the effects of market volatilities on ELMOS SEMICONDUCTOR and LANDSEA 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 LANDSEA HOMES. Check out your portfolio center. Please also check ongoing floating volatility patterns of ELMOS SEMICONDUCTOR and LANDSEA HOMES.

Diversification Opportunities for ELMOS SEMICONDUCTOR and LANDSEA HOMES

-0.27

Correlation Coefficient

ELMOS SEMICONDUCTOR  LANDSEA HOMES

Very good diversification

The 3 months correlation between ELMOS and LANDSEA is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding ELMOS SEMICONDUCTOR and LANDSEA HOMES P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LANDSEA HOMES P 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 LANDSEA HOMES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LANDSEA HOMES P has no effect on the direction of ELMOS SEMICONDUCTOR i.e., ELMOS SEMICONDUCTOR and LANDSEA HOMES go up and down completely randomly.

Pair Corralation between ELMOS SEMICONDUCTOR and LANDSEA HOMES

Assuming the 90 days trading horizon ELMOS SEMICONDUCTOR is expected to generate 1.35 times more return on investment than LANDSEA HOMES. However, ELMOS SEMICONDUCTOR is 1.35 times more volatile than LANDSEA HOMES P. It trades about 0.15 of its potential returns per unit of risk. LANDSEA HOMES P is currently generating about -0.27 per unit of risk. If you would invest  5,570  in ELMOS SEMICONDUCTOR on October 6, 2024 and sell it today you would earn a total of  1,140  from holding ELMOS SEMICONDUCTOR or generate 20.47% 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.  LANDSEA HOMES P

ELMOS SEMICONDUCTOR

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ELMOS SEMICONDUCTOR are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

LANDSEA HOMES P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LANDSEA HOMES P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with ELMOS SEMICONDUCTOR and LANDSEA HOMES

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

The idea behind ELMOS SEMICONDUCTOR and LANDSEA HOMES P 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.