Correlation Between SEALED AIR and Elmos Semiconductor

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

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

Diversification Opportunities for SEALED AIR and Elmos Semiconductor

-0.2

Correlation Coefficient

SEALED AIR  Elmos Semiconductor

Good diversification

The 3 months correlation between SEALED and Elmos is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding SEALED AIR and Elmos Semiconductor SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elmos Semiconductor and SEALED AIR 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 SEALED AIR 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 SEALED AIR i.e., SEALED AIR and Elmos Semiconductor go up and down completely randomly.

Pair Corralation between SEALED AIR and Elmos Semiconductor

Assuming the 90 days trading horizon SEALED AIR is expected to generate 11.23 times less return on investment than Elmos Semiconductor. But when comparing it to its historical volatility, SEALED AIR is 2.41 times less risky than Elmos Semiconductor. It trades about 0.03 of its potential returns per unit of risk. Elmos Semiconductor SE is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  6,030  in Elmos Semiconductor SE on October 25, 2024 and sell it today you would earn a total of  1,600  from holding Elmos Semiconductor SE or generate 26.53% return on investment over 90 days.

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

SEALED AIR   vs.  Elmos Semiconductor SE

SEALED AIR

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SEALED AIR are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, SEALED AIR is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Elmos Semiconductor

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Elmos Semiconductor SE are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Elmos Semiconductor unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SEALED AIR and Elmos Semiconductor

The main advantage of trading using opposite SEALED AIR and Elmos Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SEALED AIR 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 SEALED AIR 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.