Correlation Between Euro Tech and SemiLEDS

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

By analyzing existing cross correlation between Euro Tech Holdings and SemiLEDS, you can compare the effects of market volatilities on Euro Tech and SemiLEDS 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 Euro Tech with a short position of SemiLEDS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Euro Tech and SemiLEDS.

Diversification Opportunities for Euro Tech and SemiLEDS

-0.16

Correlation Coefficient

Euro Tech  SemiLEDS

Good diversification

The 3 months correlation between Euro and SemiLEDS is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Euro Tech Holdings and SemiLEDS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SemiLEDS and Euro Tech 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 Euro Tech Holdings are associated (or correlated) with SemiLEDS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SemiLEDS has no effect on the direction of Euro Tech i.e., Euro Tech and SemiLEDS go up and down completely randomly.

Pair Corralation between Euro Tech and SemiLEDS

Given the investment horizon of 90 days Euro Tech Holdings is expected to generate 0.91 times more return on investment than SemiLEDS. However, Euro Tech Holdings is 1.1 times less risky than SemiLEDS. It trades about 0.03 of its potential returns per unit of risk. SemiLEDS is currently generating about 0.02 per unit of risk. If you would invest  121.00  in Euro Tech Holdings on April 20, 2025 and sell it today you would earn a total of  2.00  from holding Euro Tech Holdings or generate 1.65% return on investment over 90 days.

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

Euro Tech Holdings  vs.  SemiLEDS

Euro Tech Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Euro Tech Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Euro Tech may actually be approaching a critical reversion point that can send shares even higher in August 2025.

SemiLEDS

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SemiLEDS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, SemiLEDS is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Euro Tech and SemiLEDS

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

The idea behind Euro Tech Holdings and SemiLEDS 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.