Correlation Between Elmos Semiconductor and NVIDIA

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

Diversification Opportunities for Elmos Semiconductor and NVIDIA

-0.55

Correlation Coefficient

Elmos Semiconductor  NVIDIA

Excellent diversification

The 3 months correlation between Elmos and NVIDIA is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Elmos Semiconductor SE and NVIDIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NVIDIA 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 NVIDIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NVIDIA has no effect on the direction of Elmos Semiconductor i.e., Elmos Semiconductor and NVIDIA go up and down completely randomly.

Pair Corralation between Elmos Semiconductor and NVIDIA

Assuming the 90 days trading horizon Elmos Semiconductor SE is expected to under-perform the NVIDIA. In addition to that, Elmos Semiconductor is 1.34 times more volatile than NVIDIA. It trades about -0.03 of its total potential returns per unit of risk. NVIDIA is currently generating about 0.17 per unit of volatility. If you would invest  10,900  in NVIDIA on August 31, 2024 and sell it today you would earn a total of  2,100  from holding NVIDIA or generate 19.27% return on investment over 90 days.

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

Elmos Semiconductor SE  vs.  NVIDIA

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 December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

NVIDIA

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NVIDIA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, NVIDIA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Elmos Semiconductor and NVIDIA

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

The idea behind Elmos Semiconductor SE and NVIDIA 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.