Correlation Between Aptiv PLC and Elmos Semiconductor

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

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

Diversification Opportunities for Aptiv PLC and Elmos Semiconductor

0.17

Correlation Coefficient

Aptiv PLC  Elmos Semiconductor

Average diversification

The 3 months correlation between Aptiv and Elmos is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Aptiv PLC and Elmos Semiconductor SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elmos Semiconductor and Aptiv PLC 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 Aptiv PLC 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 Aptiv PLC i.e., Aptiv PLC and Elmos Semiconductor go up and down completely randomly.

Pair Corralation between Aptiv PLC and Elmos Semiconductor

Assuming the 90 days horizon Aptiv PLC is expected to under-perform the Elmos Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, Aptiv PLC is 1.17 times less risky than Elmos Semiconductor. The stock trades about -0.03 of its potential returns per unit of risk. The Elmos Semiconductor SE is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  7,527  in Elmos Semiconductor SE on September 15, 2024 and sell it today you would lose (717.00) from holding Elmos Semiconductor SE or give up 9.53% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.64%
Values	Daily Returns

Aptiv PLC  vs.  Elmos Semiconductor SE

Aptiv PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aptiv PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Elmos Semiconductor

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Elmos Semiconductor SE are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical and fundamental indicators, Elmos Semiconductor may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Aptiv PLC and Elmos Semiconductor

The main advantage of trading using opposite Aptiv PLC and Elmos Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aptiv PLC 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 Aptiv PLC 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.