Correlation Between Elmos Semiconductor and Dennys Corp

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

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

Diversification Opportunities for Elmos Semiconductor and Dennys Corp

0.0

Correlation Coefficient

Elmos Semiconductor  Dennys Corp

Pay attention - limited upside

The 3 months correlation between Elmos and Dennys is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Elmos Semiconductor SE and Dennys Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dennys Corp 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 SE are associated (or correlated) with Dennys Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dennys Corp has no effect on the direction of Elmos Semiconductor i.e., Elmos Semiconductor and Dennys Corp go up and down completely randomly.

Pair Corralation between Elmos Semiconductor and Dennys Corp

Assuming the 90 days horizon Elmos Semiconductor SE is expected to generate 2.69 times more return on investment than Dennys Corp. However, Elmos Semiconductor is 2.69 times more volatile than Dennys Corp. It trades about 0.06 of its potential returns per unit of risk. Dennys Corp is currently generating about -0.04 per unit of risk. If you would invest  2,624  in Elmos Semiconductor SE on September 16, 2024 and sell it today you would earn a total of  6,299  from holding Elmos Semiconductor SE or generate 240.05% return on investment over 90 days.

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

Elmos Semiconductor SE  vs.  Dennys Corp

Elmos Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Elmos Semiconductor SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Elmos Semiconductor is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Dennys Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dennys Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Dennys Corp is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Elmos Semiconductor and Dennys Corp

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

The idea behind Elmos Semiconductor SE and Dennys 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.

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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.