Correlation Between JD Sports and Elmos Semiconductor

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

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

Diversification Opportunities for JD Sports and Elmos Semiconductor

0.34

Correlation Coefficient

JD Sports  Elmos Semiconductor

Weak diversification

The 3 months correlation between JD Sports and Elmos is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Elmos Semiconductor SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elmos Semiconductor and JD Sports 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 JD Sports Fashion 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 JD Sports i.e., JD Sports and Elmos Semiconductor go up and down completely randomly.

Pair Corralation between JD Sports and Elmos Semiconductor

Assuming the 90 days trading horizon JD Sports Fashion is expected to under-perform the Elmos Semiconductor. In addition to that, JD Sports is 1.01 times more volatile than Elmos Semiconductor SE. It trades about -0.11 of its total potential returns per unit of risk. Elmos Semiconductor SE is currently generating about -0.1 per unit of volatility. If you would invest  7,515  in Elmos Semiconductor SE on September 4, 2024 and sell it today you would lose (1,580) from holding Elmos Semiconductor SE or give up 21.02% of portfolio value over 90 days.

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

JD Sports Fashion  vs.  Elmos Semiconductor SE

JD Sports Fashion

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JD Sports Fashion has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

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 uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with JD Sports and Elmos Semiconductor

The main advantage of trading using opposite JD Sports and Elmos Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports 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 JD Sports Fashion 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.