Correlation Between Summit Materials and Elmos Semiconductor

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

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

Diversification Opportunities for Summit Materials and Elmos Semiconductor

0.0

Correlation Coefficient

Summit Materials  Elmos Semiconductor

Pay attention - limited upside

The 3 months correlation between Summit and Elmos is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and Elmos Semiconductor SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elmos Semiconductor and Summit Materials 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 Summit Materials 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 Summit Materials i.e., Summit Materials and Elmos Semiconductor go up and down completely randomly.

Pair Corralation between Summit Materials and Elmos Semiconductor

Considering the 90-day investment horizon Summit Materials is expected to generate 2.81 times less return on investment than Elmos Semiconductor. But when comparing it to its historical volatility, Summit Materials is 3.29 times less risky than Elmos Semiconductor. It trades about 0.06 of its potential returns per unit of risk. Elmos Semiconductor SE is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,624  in Elmos Semiconductor SE on September 26, 2024 and sell it today you would earn a total of  6,299  from holding Elmos Semiconductor SE or generate 240.05% return on investment over 90 days.

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

Summit Materials  vs.  Elmos Semiconductor SE

Summit Materials

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Materials are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Summit Materials displayed solid returns over the last few months and may actually be approaching a breakup point.

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

Pair Trading with Summit Materials and Elmos Semiconductor

The main advantage of trading using opposite Summit Materials and Elmos Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials 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 Summit Materials 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.