Correlation Between Elmos Semiconductor and Macmahon Holdings

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

Diversification Opportunities for Elmos Semiconductor and Macmahon Holdings

0.0

Correlation Coefficient

Elmos Semiconductor  Macmahon Holdings

Pay attention - limited upside

The 3 months correlation between Elmos and Macmahon is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Elmos Semiconductor SE and Macmahon Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macmahon Holdings 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 Macmahon Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macmahon Holdings has no effect on the direction of Elmos Semiconductor i.e., Elmos Semiconductor and Macmahon Holdings go up and down completely randomly.

Pair Corralation between Elmos Semiconductor and Macmahon Holdings

Assuming the 90 days horizon Elmos Semiconductor is expected to generate 2.05 times less return on investment than Macmahon Holdings. In addition to that, Elmos Semiconductor is 1.15 times more volatile than Macmahon Holdings Limited. It trades about 0.05 of its total potential returns per unit of risk. Macmahon Holdings Limited is currently generating about 0.13 per unit of volatility. If you would invest  8.79  in Macmahon Holdings Limited on December 2, 2024 and sell it today you would earn a total of  11.21  from holding Macmahon Holdings Limited or generate 127.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	27.68%
Values	Daily Returns

Elmos Semiconductor SE  vs.  Macmahon Holdings Limited

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. Despite nearly stable basic indicators, Elmos Semiconductor is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Macmahon Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Macmahon Holdings Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Elmos Semiconductor and Macmahon Holdings

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

The idea behind Elmos Semiconductor SE and Macmahon Holdings Limited 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.