Correlation Between Elmos Semiconductor and Epwin Group

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

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

Diversification Opportunities for Elmos Semiconductor and Epwin Group

-0.46

Correlation Coefficient

Elmos Semiconductor  Epwin Group

Very good diversification

The 3 months correlation between Elmos and Epwin is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Elmos Semiconductor SE and Epwin Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Epwin Group PLC and Elmos Semiconductor 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 Elmos Semiconductor SE are associated (or correlated) with Epwin Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Epwin Group PLC has no effect on the direction of Elmos Semiconductor i.e., Elmos Semiconductor and Epwin Group go up and down completely randomly.

Pair Corralation between Elmos Semiconductor and Epwin Group

Assuming the 90 days trading horizon Elmos Semiconductor SE is expected to generate 2.31 times more return on investment than Epwin Group. However, Elmos Semiconductor is 2.31 times more volatile than Epwin Group PLC. It trades about 0.03 of its potential returns per unit of risk. Epwin Group PLC is currently generating about -0.11 per unit of risk. If you would invest  6,470  in Elmos Semiconductor SE on September 25, 2024 and sell it today you would earn a total of  195.00  from holding Elmos Semiconductor SE or generate 3.01% return on investment over 90 days.

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

Elmos Semiconductor SE  vs.  Epwin Group PLC

Elmos Semiconductor

Risk-Adjusted Performance

2 of 100

Weak

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

Epwin Group PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Epwin Group PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Elmos Semiconductor and Epwin Group

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

The idea behind Elmos Semiconductor SE and Epwin Group PLC 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.