Correlation Between AFC Ajax and BE Semiconductor
Can any of the company-specific risk be diversified away by investing in both AFC Ajax 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 AFC Ajax and BE Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AFC Ajax NV and BE Semiconductor Industries, you can compare the effects of market volatilities on AFC Ajax 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 AFC Ajax with a short position of BE Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of AFC Ajax and BE Semiconductor.
Diversification Opportunities for AFC Ajax and BE Semiconductor
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between AFC and BESI is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding AFC Ajax NV 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 AFC Ajax 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 AFC Ajax NV 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 AFC Ajax i.e., AFC Ajax and BE Semiconductor go up and down completely randomly.
Pair Corralation between AFC Ajax and BE Semiconductor
Assuming the 90 days trading horizon AFC Ajax NV is expected to under-perform the BE Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, AFC Ajax NV is 2.12 times less risky than BE Semiconductor. The stock trades about 0.0 of its potential returns per unit of risk. The BE Semiconductor Industries is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 5,391 in BE Semiconductor Industries on September 12, 2024 and sell it today you would earn a total of 7,129 from holding BE Semiconductor Industries or generate 132.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AFC Ajax NV vs. BE Semiconductor Industries
Performance |
| Timeline |
| AFC Ajax NV |
| BE Semiconductor Ind |
AFC Ajax and BE Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AFC Ajax and BE Semiconductor
The main advantage of trading using opposite AFC Ajax and BE Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AFC Ajax 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.| AFC Ajax vs. Reinet Investments SCA | AFC Ajax vs. Sligro Food Group | AFC Ajax vs. SBM Offshore NV | AFC Ajax vs. BE Semiconductor Industries |
| BE Semiconductor vs. Adyen NV | BE Semiconductor vs. Prosus NV | BE Semiconductor vs. Koninklijke Philips NV | BE Semiconductor vs. Koninklijke Ahold Delhaize |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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