Correlation Between BE Semiconductor and Addus HomeCare
Can any of the company-specific risk be diversified away by investing in both BE Semiconductor and Addus HomeCare 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 Addus HomeCare 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 Addus HomeCare, you can compare the effects of market volatilities on BE Semiconductor and Addus HomeCare 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 Addus HomeCare. Check out your portfolio center. Please also check ongoing floating volatility patterns of BE Semiconductor and Addus HomeCare.
Diversification Opportunities for BE Semiconductor and Addus HomeCare
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BSI and Addus is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding BE Semiconductor Industries and Addus HomeCare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Addus HomeCare 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 Addus HomeCare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Addus HomeCare has no effect on the direction of BE Semiconductor i.e., BE Semiconductor and Addus HomeCare go up and down completely randomly.
Pair Corralation between BE Semiconductor and Addus HomeCare
Assuming the 90 days trading horizon BE Semiconductor Industries is expected to under-perform the Addus HomeCare. In addition to that, BE Semiconductor is 1.51 times more volatile than Addus HomeCare. It trades about -0.01 of its total potential returns per unit of risk. Addus HomeCare is currently generating about 0.03 per unit of volatility. If you would invest 7,800 in Addus HomeCare on December 11, 2024 and sell it today you would earn a total of 850.00 from holding Addus HomeCare or generate 10.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BE Semiconductor Industries vs. Addus HomeCare
Performance |
| Timeline |
| BE Semiconductor Ind |
| Addus HomeCare |
BE Semiconductor and Addus HomeCare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BE Semiconductor and Addus HomeCare
The main advantage of trading using opposite BE Semiconductor and Addus HomeCare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BE Semiconductor position performs unexpectedly, Addus HomeCare 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 Addus HomeCare will offset losses from the drop in Addus HomeCare's long position.| BE Semiconductor vs. Linedata Services SA | ||
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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