Correlation Between ELMOS SEMICONDUCTOR and Magna International

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

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

Diversification Opportunities for ELMOS SEMICONDUCTOR and Magna International

-0.35

Correlation Coefficient

ELMOS SEMICONDUCTOR  Magna International

Very good diversification

The 3 months correlation between ELMOS and Magna is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding ELMOS SEMICONDUCTOR and Magna International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magna International 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 Magna International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magna International has no effect on the direction of ELMOS SEMICONDUCTOR i.e., ELMOS SEMICONDUCTOR and Magna International go up and down completely randomly.

Pair Corralation between ELMOS SEMICONDUCTOR and Magna International

Assuming the 90 days trading horizon ELMOS SEMICONDUCTOR is expected to under-perform the Magna International. In addition to that, ELMOS SEMICONDUCTOR is 1.3 times more volatile than Magna International. It trades about -0.08 of its total potential returns per unit of risk. Magna International is currently generating about 0.12 per unit of volatility. If you would invest  3,649  in Magna International on September 4, 2024 and sell it today you would earn a total of  680.00  from holding Magna International or generate 18.64% 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.  Magna International

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.

Magna International

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Magna International are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Magna International reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ELMOS SEMICONDUCTOR and Magna International

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

The idea behind ELMOS SEMICONDUCTOR and Magna International 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.