Correlation Between Green World and Elan Microelectronics

Can any of the company-specific risk be diversified away by investing in both Green World and Elan Microelectronics 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 Green World and Elan Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Green World Fintech and Elan Microelectronics Corp, you can compare the effects of market volatilities on Green World and Elan Microelectronics 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 Green World with a short position of Elan Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Green World and Elan Microelectronics.

Diversification Opportunities for Green World and Elan Microelectronics

0.48

Correlation Coefficient

Green World  Elan Microelectronics

Very weak diversification

The 3 months correlation between Green and Elan is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Green World Fintech and Elan Microelectronics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elan Microelectronics and Green World 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 Green World Fintech are associated (or correlated) with Elan Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elan Microelectronics has no effect on the direction of Green World i.e., Green World and Elan Microelectronics go up and down completely randomly.

Pair Corralation between Green World and Elan Microelectronics

Assuming the 90 days trading horizon Green World Fintech is expected to under-perform the Elan Microelectronics. In addition to that, Green World is 1.44 times more volatile than Elan Microelectronics Corp. It trades about -0.2 of its total potential returns per unit of risk. Elan Microelectronics Corp is currently generating about 0.07 per unit of volatility. If you would invest  14,600  in Elan Microelectronics Corp on October 1, 2024 and sell it today you would earn a total of  800.00  from holding Elan Microelectronics Corp or generate 5.48% return on investment over 90 days.

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

Green World Fintech  vs.  Elan Microelectronics Corp

Green World Fintech

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Green World Fintech are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Green World showed solid returns over the last few months and may actually be approaching a breakup point.

Elan Microelectronics

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Elan Microelectronics Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Elan Microelectronics may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Green World and Elan Microelectronics

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

The idea behind Green World Fintech and Elan Microelectronics Corp 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.