Correlation Between ELMOS SEMICONDUCTOR and Waste Management

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

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

Diversification Opportunities for ELMOS SEMICONDUCTOR and Waste Management

-0.45

Correlation Coefficient

ELMOS SEMICONDUCTOR  Waste Management

Very good diversification

The 3 months correlation between ELMOS and Waste is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding ELMOS SEMICONDUCTOR and Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Management 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 Waste Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Management has no effect on the direction of ELMOS SEMICONDUCTOR i.e., ELMOS SEMICONDUCTOR and Waste Management go up and down completely randomly.

Pair Corralation between ELMOS SEMICONDUCTOR and Waste Management

Assuming the 90 days trading horizon ELMOS SEMICONDUCTOR is expected to under-perform the Waste Management. In addition to that, ELMOS SEMICONDUCTOR is 2.43 times more volatile than Waste Management. It trades about -0.1 of its total potential returns per unit of risk. Waste Management is currently generating about 0.17 per unit of volatility. If you would invest  18,595  in Waste Management on September 5, 2024 and sell it today you would earn a total of  2,770  from holding Waste Management or generate 14.9% 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.  Waste Management

ELMOS SEMICONDUCTOR

Risk-Adjusted Performance

0 of 100

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 unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Waste Management

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Waste Management are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Waste Management unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ELMOS SEMICONDUCTOR and Waste Management

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

The idea behind ELMOS SEMICONDUCTOR and Waste Management 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.