Correlation Between Elmos Semiconductor and PARAGON GROUP

Can any of the company-specific risk be diversified away by investing in both Elmos Semiconductor and PARAGON GROUP 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 PARAGON GROUP into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Elmos Semiconductor SE and PARAGON GROUP, you can compare the effects of market volatilities on Elmos Semiconductor and PARAGON GROUP 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 PARAGON GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elmos Semiconductor and PARAGON GROUP.

Diversification Opportunities for Elmos Semiconductor and PARAGON GROUP

0.03

Correlation Coefficient

Elmos Semiconductor  PARAGON GROUP

Significant diversification

The 3 months correlation between Elmos and PARAGON is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Elmos Semiconductor SE and PARAGON GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PARAGON GROUP 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 SE are associated (or correlated) with PARAGON GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PARAGON GROUP has no effect on the direction of Elmos Semiconductor i.e., Elmos Semiconductor and PARAGON GROUP go up and down completely randomly.

Pair Corralation between Elmos Semiconductor and PARAGON GROUP

Assuming the 90 days trading horizon Elmos Semiconductor SE is expected to generate 1.89 times more return on investment than PARAGON GROUP. However, Elmos Semiconductor is 1.89 times more volatile than PARAGON GROUP. It trades about 0.13 of its potential returns per unit of risk. PARAGON GROUP is currently generating about 0.0 per unit of risk. If you would invest  6,030  in Elmos Semiconductor SE on October 25, 2024 and sell it today you would earn a total of  1,600  from holding Elmos Semiconductor SE or generate 26.53% return on investment over 90 days.

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

Elmos Semiconductor SE  vs.  PARAGON GROUP

Elmos Semiconductor

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Elmos Semiconductor SE are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Elmos Semiconductor unveiled solid returns over the last few months and may actually be approaching a breakup point.

PARAGON GROUP

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Elmos Semiconductor and PARAGON GROUP

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

The idea behind Elmos Semiconductor SE and PARAGON GROUP 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.