Correlation Between BE Semiconductor and Cairn Homes
Can any of the company-specific risk be diversified away by investing in both BE Semiconductor and Cairn Homes 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 BE Semiconductor and Cairn Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BE Semiconductor Industries and Cairn Homes PLC, you can compare the effects of market volatilities on BE Semiconductor and Cairn Homes 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 BE Semiconductor with a short position of Cairn Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of BE Semiconductor and Cairn Homes.
Diversification Opportunities for BE Semiconductor and Cairn Homes
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between 0XVE and Cairn is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding BE Semiconductor Industries and Cairn Homes PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cairn Homes PLC and BE 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 BE Semiconductor Industries are associated (or correlated) with Cairn Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cairn Homes PLC has no effect on the direction of BE Semiconductor i.e., BE Semiconductor and Cairn Homes go up and down completely randomly.
Pair Corralation between BE Semiconductor and Cairn Homes
Assuming the 90 days trading horizon BE Semiconductor Industries is expected to under-perform the Cairn Homes. In addition to that, BE Semiconductor is 1.88 times more volatile than Cairn Homes PLC. It trades about -0.13 of its total potential returns per unit of risk. Cairn Homes PLC is currently generating about -0.15 per unit of volatility. If you would invest 19,380 in Cairn Homes PLC on November 2, 2024 and sell it today you would lose (1,060) from holding Cairn Homes PLC or give up 5.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BE Semiconductor Industries vs. Cairn Homes PLC
Performance |
| Timeline |
| BE Semiconductor Ind |
| Cairn Homes PLC |
BE Semiconductor and Cairn Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BE Semiconductor and Cairn Homes
The main advantage of trading using opposite BE Semiconductor and Cairn Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BE Semiconductor position performs unexpectedly, Cairn Homes 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 Cairn Homes will offset losses from the drop in Cairn Homes' long position.| BE Semiconductor vs. Hilton Food Group | BE Semiconductor vs. Edita Food Industries | BE Semiconductor vs. Batm Advanced Communications | BE Semiconductor vs. Verizon Communications |
| Cairn Homes vs. GoldMining | Cairn Homes vs. Tatton Asset Management | Cairn Homes vs. Trainline Plc | Cairn Homes vs. Eastinco Mining Exploration |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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