Correlation Between BE Semiconductor and United Utilities
Can any of the company-specific risk be diversified away by investing in both BE Semiconductor and United Utilities 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 United Utilities 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 United Utilities Group, you can compare the effects of market volatilities on BE Semiconductor and United Utilities 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 United Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of BE Semiconductor and United Utilities.
Diversification Opportunities for BE Semiconductor and United Utilities
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between 0XVE and United is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding BE Semiconductor Industries and United Utilities Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Utilities 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 United Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Utilities has no effect on the direction of BE Semiconductor i.e., BE Semiconductor and United Utilities go up and down completely randomly.
Pair Corralation between BE Semiconductor and United Utilities
Assuming the 90 days trading horizon BE Semiconductor Industries is expected to generate 2.2 times more return on investment than United Utilities. However, BE Semiconductor is 2.2 times more volatile than United Utilities Group. It trades about 0.08 of its potential returns per unit of risk. United Utilities Group is currently generating about 0.05 per unit of risk. If you would invest 11,210 in BE Semiconductor Industries on September 12, 2024 and sell it today you would earn a total of 1,415 from holding BE Semiconductor Industries or generate 12.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
BE Semiconductor Industries vs. United Utilities Group
Performance |
| Timeline |
| BE Semiconductor Ind |
| United Utilities |
BE Semiconductor and United Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BE Semiconductor and United Utilities
The main advantage of trading using opposite BE Semiconductor and United Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BE Semiconductor position performs unexpectedly, United Utilities 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 United Utilities will offset losses from the drop in United Utilities' long position.| BE Semiconductor vs. Symphony Environmental Technologies | BE Semiconductor vs. Take Two Interactive Software | BE Semiconductor vs. TechnipFMC PLC | BE Semiconductor vs. Vitec Software Group |
| United Utilities vs. Toyota Motor Corp | United Utilities vs. SoftBank Group Corp | United Utilities vs. OTP Bank Nyrt | United Utilities vs. Hartford Financial Services |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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