Correlation Between FUYO GENERAL and Elmos Semiconductor

Can any of the company-specific risk be diversified away by investing in both FUYO GENERAL and Elmos Semiconductor 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 FUYO GENERAL and Elmos Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between FUYO GENERAL LEASE and Elmos Semiconductor SE, you can compare the effects of market volatilities on FUYO GENERAL and Elmos Semiconductor 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 FUYO GENERAL with a short position of Elmos Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of FUYO GENERAL and Elmos Semiconductor.

Diversification Opportunities for FUYO GENERAL and Elmos Semiconductor

0.52

Correlation Coefficient

FUYO GENERAL  Elmos Semiconductor

Very weak diversification

The 3 months correlation between FUYO and Elmos is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding FUYO GENERAL LEASE and Elmos Semiconductor SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elmos Semiconductor and FUYO GENERAL 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 FUYO GENERAL LEASE are associated (or correlated) with Elmos Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elmos Semiconductor has no effect on the direction of FUYO GENERAL i.e., FUYO GENERAL and Elmos Semiconductor go up and down completely randomly.

Pair Corralation between FUYO GENERAL and Elmos Semiconductor

Assuming the 90 days horizon FUYO GENERAL LEASE is expected to under-perform the Elmos Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, FUYO GENERAL LEASE is 2.07 times less risky than Elmos Semiconductor. The stock trades about -0.04 of its potential returns per unit of risk. The Elmos Semiconductor SE is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  6,380  in Elmos Semiconductor SE on October 5, 2024 and sell it today you would earn a total of  370.00  from holding Elmos Semiconductor SE or generate 5.8% return on investment over 90 days.

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

FUYO GENERAL LEASE  vs.  Elmos Semiconductor SE

FUYO GENERAL LEASE

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days FUYO GENERAL LEASE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, FUYO GENERAL is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Elmos Semiconductor

Risk-Adjusted Performance

0 of 100

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.

Pair Trading with FUYO GENERAL and Elmos Semiconductor

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

The idea behind FUYO GENERAL LEASE and Elmos Semiconductor SE 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.