Correlation Between Elmos Semiconductor and Tyson Foods

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

Diversification Opportunities for Elmos Semiconductor and Tyson Foods

-0.8

Correlation Coefficient

Elmos Semiconductor  Tyson Foods

Pay attention - limited upside

The 3 months correlation between Elmos and Tyson is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Elmos Semiconductor SE and Tyson Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tyson Foods 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 Tyson Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tyson Foods has no effect on the direction of Elmos Semiconductor i.e., Elmos Semiconductor and Tyson Foods go up and down completely randomly.

Pair Corralation between Elmos Semiconductor and Tyson Foods

Assuming the 90 days trading horizon Elmos Semiconductor SE is expected to generate 1.54 times more return on investment than Tyson Foods. However, Elmos Semiconductor is 1.54 times more volatile than Tyson Foods. It trades about 0.12 of its potential returns per unit of risk. Tyson Foods is currently generating about -0.07 per unit of risk. If you would invest  6,170  in Elmos Semiconductor SE on November 20, 2024 and sell it today you would earn a total of  1,090  from holding Elmos Semiconductor SE or generate 17.67% return on investment over 90 days.

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

Elmos Semiconductor SE  vs.  Tyson Foods

Elmos Semiconductor

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Elmos Semiconductor SE are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical and fundamental indicators, Elmos Semiconductor unveiled solid returns over the last few months and may actually be approaching a breakup point.

Tyson Foods

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tyson Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Elmos Semiconductor and Tyson Foods

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

The idea behind Elmos Semiconductor SE and Tyson Foods 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.