Correlation Between ELMOS SEMICONDUCTOR and PROSIEBENSAT1 MEDIADR4

Can any of the company-specific risk be diversified away by investing in both ELMOS SEMICONDUCTOR and PROSIEBENSAT1 MEDIADR4 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 PROSIEBENSAT1 MEDIADR4 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ELMOS SEMICONDUCTOR and PROSIEBENSAT1 MEDIADR4, you can compare the effects of market volatilities on ELMOS SEMICONDUCTOR and PROSIEBENSAT1 MEDIADR4 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 PROSIEBENSAT1 MEDIADR4. Check out your portfolio center. Please also check ongoing floating volatility patterns of ELMOS SEMICONDUCTOR and PROSIEBENSAT1 MEDIADR4.

Diversification Opportunities for ELMOS SEMICONDUCTOR and PROSIEBENSAT1 MEDIADR4

0.05

Correlation Coefficient

ELMOS SEMICONDUCTOR  PROSIEBENSAT1 MEDIADR4

Significant diversification

The 3 months correlation between ELMOS and PROSIEBENSAT1 is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding ELMOS SEMICONDUCTOR and PROSIEBENSAT1 MEDIADR4 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PROSIEBENSAT1 MEDIADR4 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 PROSIEBENSAT1 MEDIADR4. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PROSIEBENSAT1 MEDIADR4 has no effect on the direction of ELMOS SEMICONDUCTOR i.e., ELMOS SEMICONDUCTOR and PROSIEBENSAT1 MEDIADR4 go up and down completely randomly.

Pair Corralation between ELMOS SEMICONDUCTOR and PROSIEBENSAT1 MEDIADR4

Assuming the 90 days trading horizon ELMOS SEMICONDUCTOR is expected to generate 1.11 times less return on investment than PROSIEBENSAT1 MEDIADR4. But when comparing it to its historical volatility, ELMOS SEMICONDUCTOR is 1.53 times less risky than PROSIEBENSAT1 MEDIADR4. It trades about 0.29 of its potential returns per unit of risk. PROSIEBENSAT1 MEDIADR4 is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  115.00  in PROSIEBENSAT1 MEDIADR4 on October 5, 2024 and sell it today you would earn a total of  15.00  from holding PROSIEBENSAT1 MEDIADR4 or generate 13.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

ELMOS SEMICONDUCTOR  vs.  PROSIEBENSAT1 MEDIADR4

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.

PROSIEBENSAT1 MEDIADR4

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PROSIEBENSAT1 MEDIADR4 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's primary 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 PROSIEBENSAT1 MEDIADR4

The main advantage of trading using opposite ELMOS SEMICONDUCTOR and PROSIEBENSAT1 MEDIADR4 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ELMOS SEMICONDUCTOR position performs unexpectedly, PROSIEBENSAT1 MEDIADR4 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 PROSIEBENSAT1 MEDIADR4 will offset losses from the drop in PROSIEBENSAT1 MEDIADR4's long position.

The idea behind ELMOS SEMICONDUCTOR and PROSIEBENSAT1 MEDIADR4 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.