Correlation Between ELMOS SEMICONDUCTOR and Raytheon Technologies

Can any of the company-specific risk be diversified away by investing in both ELMOS SEMICONDUCTOR and Raytheon Technologies 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 Raytheon Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ELMOS SEMICONDUCTOR and Raytheon Technologies Corp, you can compare the effects of market volatilities on ELMOS SEMICONDUCTOR and Raytheon Technologies 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 Raytheon Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of ELMOS SEMICONDUCTOR and Raytheon Technologies.

Diversification Opportunities for ELMOS SEMICONDUCTOR and Raytheon Technologies

-0.38

Correlation Coefficient

ELMOS SEMICONDUCTOR  Raytheon Technologies

Very good diversification

The 3 months correlation between ELMOS and Raytheon is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding ELMOS SEMICONDUCTOR and Raytheon Technologies Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raytheon Technologies 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 are associated (or correlated) with Raytheon Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raytheon Technologies has no effect on the direction of ELMOS SEMICONDUCTOR i.e., ELMOS SEMICONDUCTOR and Raytheon Technologies go up and down completely randomly.

Pair Corralation between ELMOS SEMICONDUCTOR and Raytheon Technologies

Assuming the 90 days trading horizon ELMOS SEMICONDUCTOR is expected to under-perform the Raytheon Technologies. In addition to that, ELMOS SEMICONDUCTOR is 2.28 times more volatile than Raytheon Technologies Corp. It trades about -0.1 of its total potential returns per unit of risk. Raytheon Technologies Corp is currently generating about 0.07 per unit of volatility. If you would invest  10,627  in Raytheon Technologies Corp on September 5, 2024 and sell it today you would earn a total of  647.00  from holding Raytheon Technologies Corp or generate 6.09% return on investment over 90 days.

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

ELMOS SEMICONDUCTOR  vs.  Raytheon Technologies Corp

ELMOS SEMICONDUCTOR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ELMOS SEMICONDUCTOR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Raytheon Technologies

Risk-Adjusted Performance

5 of 100

Modest

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

Pair Trading with ELMOS SEMICONDUCTOR and Raytheon Technologies

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

The idea behind ELMOS SEMICONDUCTOR and Raytheon Technologies 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.