Correlation Between ELMOS SEMICONDUCTOR and YAMAHA MOTOR

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

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

Diversification Opportunities for ELMOS SEMICONDUCTOR and YAMAHA MOTOR

0.5

Correlation Coefficient

ELMOS SEMICONDUCTOR  YAMAHA MOTOR

Very weak diversification

The 3 months correlation between ELMOS and YAMAHA is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding ELMOS SEMICONDUCTOR and YAMAHA MOTOR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YAMAHA MOTOR 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 YAMAHA MOTOR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YAMAHA MOTOR has no effect on the direction of ELMOS SEMICONDUCTOR i.e., ELMOS SEMICONDUCTOR and YAMAHA MOTOR go up and down completely randomly.

Pair Corralation between ELMOS SEMICONDUCTOR and YAMAHA MOTOR

Assuming the 90 days trading horizon ELMOS SEMICONDUCTOR is expected to generate 2.71 times more return on investment than YAMAHA MOTOR. However, ELMOS SEMICONDUCTOR is 2.71 times more volatile than YAMAHA MOTOR. It trades about 0.07 of its potential returns per unit of risk. YAMAHA MOTOR is currently generating about -0.03 per unit of risk. If you would invest  6,580  in ELMOS SEMICONDUCTOR on October 12, 2024 and sell it today you would earn a total of  870.00  from holding ELMOS SEMICONDUCTOR or generate 13.22% return on investment over 90 days.

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

ELMOS SEMICONDUCTOR  vs.  YAMAHA MOTOR

ELMOS SEMICONDUCTOR

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ELMOS SEMICONDUCTOR are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, ELMOS SEMICONDUCTOR exhibited solid returns over the last few months and may actually be approaching a breakup point.

YAMAHA MOTOR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days YAMAHA MOTOR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, YAMAHA MOTOR is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with ELMOS SEMICONDUCTOR and YAMAHA MOTOR

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

The idea behind ELMOS SEMICONDUCTOR and YAMAHA MOTOR 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.