Correlation Between Elan Microelectronics and E Lead
Can any of the company-specific risk be diversified away by investing in both Elan Microelectronics and E Lead 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 Elan Microelectronics and E Lead into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elan Microelectronics Corp and E Lead Electronic Co, you can compare the effects of market volatilities on Elan Microelectronics and E Lead 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 Elan Microelectronics with a short position of E Lead. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elan Microelectronics and E Lead.
Diversification Opportunities for Elan Microelectronics and E Lead
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Elan and 2497 is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Elan Microelectronics Corp and E Lead Electronic Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E Lead Electronic and Elan Microelectronics 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 Elan Microelectronics Corp are associated (or correlated) with E Lead. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E Lead Electronic has no effect on the direction of Elan Microelectronics i.e., Elan Microelectronics and E Lead go up and down completely randomly.
Pair Corralation between Elan Microelectronics and E Lead
Assuming the 90 days trading horizon Elan Microelectronics Corp is expected to generate 0.8 times more return on investment than E Lead. However, Elan Microelectronics Corp is 1.25 times less risky than E Lead. It trades about 0.04 of its potential returns per unit of risk. E Lead Electronic Co is currently generating about -0.16 per unit of risk. If you would invest 14,900 in Elan Microelectronics Corp on September 12, 2024 and sell it today you would earn a total of 500.00 from holding Elan Microelectronics Corp or generate 3.36% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Elan Microelectronics Corp vs. E Lead Electronic Co
Performance |
Timeline |
Elan Microelectronics |
E Lead Electronic |
Elan Microelectronics and E Lead Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Elan Microelectronics and E Lead
The main advantage of trading using opposite Elan Microelectronics and E Lead positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elan Microelectronics position performs unexpectedly, E Lead 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 E Lead will offset losses from the drop in E Lead's long position.Elan Microelectronics vs. AU Optronics | Elan Microelectronics vs. Innolux Corp | Elan Microelectronics vs. Ruentex Development Co | Elan Microelectronics vs. WiseChip Semiconductor |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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