Correlation Between ELMOS SEMICONDUCTOR and Fuji Media

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

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

Diversification Opportunities for ELMOS SEMICONDUCTOR and Fuji Media

-0.52

Correlation Coefficient

ELMOS SEMICONDUCTOR  Fuji Media

Excellent diversification

The 3 months correlation between ELMOS and Fuji is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding ELMOS SEMICONDUCTOR and Fuji Media Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fuji Media Holdings 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 Fuji Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fuji Media Holdings has no effect on the direction of ELMOS SEMICONDUCTOR i.e., ELMOS SEMICONDUCTOR and Fuji Media go up and down completely randomly.

Pair Corralation between ELMOS SEMICONDUCTOR and Fuji Media

Assuming the 90 days trading horizon ELMOS SEMICONDUCTOR is expected to under-perform the Fuji Media. But the stock apears to be less risky and, when comparing its historical volatility, ELMOS SEMICONDUCTOR is 1.44 times less risky than Fuji Media. The stock trades about -0.02 of its potential returns per unit of risk. The Fuji Media Holdings is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,030  in Fuji Media Holdings on December 28, 2024 and sell it today you would earn a total of  420.00  from holding Fuji Media Holdings or generate 40.78% 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.  Fuji Media Holdings

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 rather sound technical and fundamental indicators, ELMOS SEMICONDUCTOR is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Fuji Media Holdings

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fuji Media Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Fuji Media reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ELMOS SEMICONDUCTOR and Fuji Media

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

The idea behind ELMOS SEMICONDUCTOR and Fuji Media Holdings 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.