Correlation Between Elmos Semiconductor and CVS Health

Can any of the company-specific risk be diversified away by investing in both Elmos Semiconductor and CVS Health 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 CVS Health 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 CVS Health, you can compare the effects of market volatilities on Elmos Semiconductor and CVS Health 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 CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elmos Semiconductor and CVS Health.

Diversification Opportunities for Elmos Semiconductor and CVS Health

-0.07

Correlation Coefficient

Elmos Semiconductor  CVS Health

Good diversification

The 3 months correlation between Elmos and CVS is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Elmos Semiconductor SE and CVS Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Health 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 CVS Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVS Health has no effect on the direction of Elmos Semiconductor i.e., Elmos Semiconductor and CVS Health go up and down completely randomly.

Pair Corralation between Elmos Semiconductor and CVS Health

Assuming the 90 days trading horizon Elmos Semiconductor SE is expected to under-perform the CVS Health. In addition to that, Elmos Semiconductor is 1.21 times more volatile than CVS Health. It trades about -0.08 of its total potential returns per unit of risk. CVS Health is currently generating about 0.07 per unit of volatility. If you would invest  5,136  in CVS Health on September 5, 2024 and sell it today you would earn a total of  523.00  from holding CVS Health or generate 10.18% return on investment over 90 days.

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

Elmos Semiconductor SE  vs.  CVS Health

Elmos Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Elmos Semiconductor SE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

CVS Health

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CVS Health are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, CVS Health may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Elmos Semiconductor and CVS Health

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

The idea behind Elmos Semiconductor SE and CVS Health 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.