Correlation Between Elmos Semiconductor and ASML Holding
Can any of the company-specific risk be diversified away by investing in both Elmos Semiconductor and ASML Holding 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 ASML Holding 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 ASML Holding NV, you can compare the effects of market volatilities on Elmos Semiconductor and ASML Holding 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 ASML Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elmos Semiconductor and ASML Holding.
Diversification Opportunities for Elmos Semiconductor and ASML Holding
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Elmos and ASML is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Elmos Semiconductor SE and ASML Holding NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASML Holding NV 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 ASML Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASML Holding NV has no effect on the direction of Elmos Semiconductor i.e., Elmos Semiconductor and ASML Holding go up and down completely randomly.
Pair Corralation between Elmos Semiconductor and ASML Holding
Assuming the 90 days trading horizon Elmos Semiconductor SE is expected to under-perform the ASML Holding. In addition to that, Elmos Semiconductor is 1.23 times more volatile than ASML Holding NV. It trades about -0.05 of its total potential returns per unit of risk. ASML Holding NV is currently generating about -0.02 per unit of volatility. If you would invest 67,564 in ASML Holding NV on December 29, 2024 and sell it today you would lose (3,354) from holding ASML Holding NV or give up 4.96% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Elmos Semiconductor SE vs. ASML Holding NV
Performance |
Timeline |
Elmos Semiconductor |
ASML Holding NV |
Elmos Semiconductor and ASML Holding Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Elmos Semiconductor and ASML Holding
The main advantage of trading using opposite Elmos Semiconductor and ASML Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elmos Semiconductor position performs unexpectedly, ASML Holding 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 ASML Holding will offset losses from the drop in ASML Holding's long position.Elmos Semiconductor vs. NVIDIA | Elmos Semiconductor vs. NVIDIA | Elmos Semiconductor vs. Taiwan Semiconductor Manufacturing | Elmos Semiconductor vs. Broadcom |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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