Correlation Between BE Semiconductor and Teradyne
Can any of the company-specific risk be diversified away by investing in both BE Semiconductor and Teradyne 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 Teradyne 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 Teradyne, you can compare the effects of market volatilities on BE Semiconductor and Teradyne 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 Teradyne. Check out your portfolio center. Please also check ongoing floating volatility patterns of BE Semiconductor and Teradyne.
Diversification Opportunities for BE Semiconductor and Teradyne
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BESIY and Teradyne is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding BE Semiconductor Industries and Teradyne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teradyne 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 Teradyne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teradyne has no effect on the direction of BE Semiconductor i.e., BE Semiconductor and Teradyne go up and down completely randomly.
Pair Corralation between BE Semiconductor and Teradyne
Assuming the 90 days horizon BE Semiconductor Industries is expected to generate 1.1 times more return on investment than Teradyne. However, BE Semiconductor is 1.1 times more volatile than Teradyne. It trades about 0.23 of its potential returns per unit of risk. Teradyne is currently generating about 0.08 per unit of risk. If you would invest 13,872 in BE Semiconductor Industries on October 23, 2024 and sell it today you would earn a total of 1,465 from holding BE Semiconductor Industries or generate 10.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.74% |
| Values | Daily Returns |
BE Semiconductor Industries vs. Teradyne
Performance |
| Timeline |
| BE Semiconductor Ind |
| Teradyne |
BE Semiconductor and Teradyne Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BE Semiconductor and Teradyne
The main advantage of trading using opposite BE Semiconductor and Teradyne positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BE Semiconductor position performs unexpectedly, Teradyne 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 Teradyne will offset losses from the drop in Teradyne's long position.| BE Semiconductor vs. Lasertec | BE Semiconductor vs. Tokyo Electron Ltd | BE Semiconductor vs. Asm Pacific Technology | BE Semiconductor vs. Sumco Corp ADR |
| Teradyne vs. IPG Photonics | Teradyne vs. Ultra Clean Holdings | Teradyne vs. Onto Innovation | Teradyne vs. Cohu Inc |
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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