Correlation Between Benchmark Electronics and Deswell Industries
Can any of the company-specific risk be diversified away by investing in both Benchmark Electronics and Deswell Industries 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 Benchmark Electronics and Deswell Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Benchmark Electronics and Deswell Industries, you can compare the effects of market volatilities on Benchmark Electronics and Deswell Industries 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 Benchmark Electronics with a short position of Deswell Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Benchmark Electronics and Deswell Industries.
Diversification Opportunities for Benchmark Electronics and Deswell Industries
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Benchmark and Deswell is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Benchmark Electronics and Deswell Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deswell Industries and Benchmark Electronics 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 Benchmark Electronics are associated (or correlated) with Deswell Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deswell Industries has no effect on the direction of Benchmark Electronics i.e., Benchmark Electronics and Deswell Industries go up and down completely randomly.
Pair Corralation between Benchmark Electronics and Deswell Industries
Considering the 90-day investment horizon Benchmark Electronics is expected to under-perform the Deswell Industries. In addition to that, Benchmark Electronics is 2.05 times more volatile than Deswell Industries. It trades about -0.12 of its total potential returns per unit of risk. Deswell Industries is currently generating about -0.01 per unit of volatility. If you would invest 239.00 in Deswell Industries on November 3, 2024 and sell it today you would lose (1.00) from holding Deswell Industries or give up 0.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Benchmark Electronics vs. Deswell Industries
Performance |
| Timeline |
| Benchmark Electronics |
| Deswell Industries |
Benchmark Electronics and Deswell Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Benchmark Electronics and Deswell Industries
The main advantage of trading using opposite Benchmark Electronics and Deswell Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Benchmark Electronics position performs unexpectedly, Deswell Industries 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 Deswell Industries will offset losses from the drop in Deswell Industries' long position.| Benchmark Electronics vs. Sanmina | Benchmark Electronics vs. Methode Electronics | Benchmark Electronics vs. OSI Systems | Benchmark Electronics vs. Celestica |
| Deswell Industries vs. Ieh Corp | Deswell Industries vs. LGL Group | Deswell Industries vs. SigmaTron International | Deswell Industries vs. Daktronics |
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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