Correlation Between Elmos Semiconductor and Netcall PLC

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

Diversification Opportunities for Elmos Semiconductor and Netcall PLC

-0.28

Correlation Coefficient

Elmos Semiconductor  Netcall PLC

Very good diversification

The 3 months correlation between Elmos and Netcall is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Elmos Semiconductor SE and Netcall PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netcall PLC 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 Netcall PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Netcall PLC has no effect on the direction of Elmos Semiconductor i.e., Elmos Semiconductor and Netcall PLC go up and down completely randomly.

Pair Corralation between Elmos Semiconductor and Netcall PLC

Assuming the 90 days trading horizon Elmos Semiconductor is expected to generate 11.25 times less return on investment than Netcall PLC. But when comparing it to its historical volatility, Elmos Semiconductor SE is 1.11 times less risky than Netcall PLC. It trades about 0.01 of its potential returns per unit of risk. Netcall PLC is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  116.00  in Netcall PLC on December 22, 2024 and sell it today you would earn a total of  19.00  from holding Netcall PLC or generate 16.38% 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.  Netcall PLC

Elmos Semiconductor

Risk-Adjusted Performance

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 comparatively stable technical and fundamental indicators, Elmos Semiconductor is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Netcall PLC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Netcall PLC are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Netcall PLC reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Elmos Semiconductor and Netcall PLC

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

The idea behind Elmos Semiconductor SE and Netcall PLC 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.