Correlation Between CN MODERN and BE Semiconductor
Can any of the company-specific risk be diversified away by investing in both CN MODERN and BE 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 CN MODERN and BE Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CN MODERN DAIRY and BE Semiconductor Industries, you can compare the effects of market volatilities on CN MODERN and BE 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 CN MODERN with a short position of BE Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of CN MODERN and BE Semiconductor.
Diversification Opportunities for CN MODERN and BE Semiconductor
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 07M and BSI is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding CN MODERN DAIRY and BE Semiconductor Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BE Semiconductor Ind and CN MODERN 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 CN MODERN DAIRY are associated (or correlated) with BE Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BE Semiconductor Ind has no effect on the direction of CN MODERN i.e., CN MODERN and BE Semiconductor go up and down completely randomly.
Pair Corralation between CN MODERN and BE Semiconductor
Assuming the 90 days trading horizon CN MODERN DAIRY is expected to under-perform the BE Semiconductor. In addition to that, CN MODERN is 1.67 times more volatile than BE Semiconductor Industries. It trades about -0.02 of its total potential returns per unit of risk. BE Semiconductor Industries is currently generating about 0.18 per unit of volatility. If you would invest 12,720 in BE Semiconductor Industries on October 17, 2024 and sell it today you would earn a total of 1,170 from holding BE Semiconductor Industries or generate 9.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CN MODERN DAIRY vs. BE Semiconductor Industries
Performance |
| Timeline |
| CN MODERN DAIRY |
| BE Semiconductor Ind |
CN MODERN and BE Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CN MODERN and BE Semiconductor
The main advantage of trading using opposite CN MODERN and BE Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CN MODERN position performs unexpectedly, BE 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 BE Semiconductor will offset losses from the drop in BE Semiconductor's long position.| CN MODERN vs. Clean Energy Fuels | CN MODERN vs. Safety Insurance Group | CN MODERN vs. Japan Post Insurance | CN MODERN vs. INSURANCE AUST GRP |
| BE Semiconductor vs. ScanSource | BE Semiconductor vs. United Natural Foods | BE Semiconductor vs. MEDCAW INVESTMENTS LS 01 | BE Semiconductor vs. CHRYSALIS INVESTMENTS LTD |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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