Correlation Between BE Semiconductor and Pharming Group
Can any of the company-specific risk be diversified away by investing in both BE Semiconductor and Pharming Group 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 Pharming Group 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 Pharming Group NV, you can compare the effects of market volatilities on BE Semiconductor and Pharming Group 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 Pharming Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of BE Semiconductor and Pharming Group.
Diversification Opportunities for BE Semiconductor and Pharming Group
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BESI and Pharming is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding BE Semiconductor Industries and Pharming Group NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pharming Group NV 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 Pharming Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pharming Group NV has no effect on the direction of BE Semiconductor i.e., BE Semiconductor and Pharming Group go up and down completely randomly.
Pair Corralation between BE Semiconductor and Pharming Group
Assuming the 90 days trading horizon BE Semiconductor Industries is expected to generate 1.12 times more return on investment than Pharming Group. However, BE Semiconductor is 1.12 times more volatile than Pharming Group NV. It trades about -0.01 of its potential returns per unit of risk. Pharming Group NV is currently generating about -0.03 per unit of risk. If you would invest 12,633 in BE Semiconductor Industries on January 23, 2025 and sell it today you would lose (3,315) from holding BE Semiconductor Industries or give up 26.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.72% |
| Values | Daily Returns |
BE Semiconductor Industries vs. Pharming Group NV
Performance |
| Timeline |
| BE Semiconductor Ind |
| Pharming Group NV |
BE Semiconductor and Pharming Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BE Semiconductor and Pharming Group
The main advantage of trading using opposite BE Semiconductor and Pharming Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BE Semiconductor position performs unexpectedly, Pharming Group 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 Pharming Group will offset losses from the drop in Pharming Group's long position.| BE Semiconductor vs. ASM International NV | BE Semiconductor vs. ASML Holding NV | BE Semiconductor vs. ASR Nederland NV | BE Semiconductor vs. Koninklijke Ahold Delhaize |
| Pharming Group vs. Galapagos NV | Pharming Group vs. Koninklijke BAM Groep | Pharming Group vs. Fugro NV | Pharming Group vs. PostNL NV |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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