Correlation Between Cleantech Power and Elmos Semiconductor

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

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

Diversification Opportunities for Cleantech Power and Elmos Semiconductor

-1.0

Correlation Coefficient

Cleantech Power  Elmos Semiconductor

Pay attention - limited upside

The 3 months correlation between Cleantech and Elmos is -1.0. Overlapping area represents the amount of risk that can be diversified away by holding Cleantech Power Corp and Elmos Semiconductor SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elmos Semiconductor and Cleantech Power 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 Cleantech Power Corp 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 Cleantech Power i.e., Cleantech Power and Elmos Semiconductor go up and down completely randomly.

Pair Corralation between Cleantech Power and Elmos Semiconductor

Assuming the 90 days horizon Cleantech Power Corp is expected to generate 12.49 times more return on investment than Elmos Semiconductor. However, Cleantech Power is 12.49 times more volatile than Elmos Semiconductor SE. It trades about 0.1 of its potential returns per unit of risk. Elmos Semiconductor SE is currently generating about 0.05 per unit of risk. If you would invest  5.02  in Cleantech Power Corp on September 25, 2024 and sell it today you would lose (4.43) from holding Cleantech Power Corp or give up 88.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Strong
Accuracy	94.35%
Values	Daily Returns

Cleantech Power Corp  vs.  Elmos Semiconductor SE

Cleantech Power Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cleantech Power Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Cleantech Power 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

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 newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Cleantech Power and Elmos Semiconductor

The main advantage of trading using opposite Cleantech Power and Elmos Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cleantech Power 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 Cleantech Power Corp 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.