Correlation Between BE Semiconductor and Associated British
Can any of the company-specific risk be diversified away by investing in both BE Semiconductor and Associated British 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 Associated British 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 Associated British Foods, you can compare the effects of market volatilities on BE Semiconductor and Associated British 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 Associated British. Check out your portfolio center. Please also check ongoing floating volatility patterns of BE Semiconductor and Associated British.
Diversification Opportunities for BE Semiconductor and Associated British
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BSI and Associated is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding BE Semiconductor Industries and Associated British Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Associated British Foods 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 Associated British. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Associated British Foods has no effect on the direction of BE Semiconductor i.e., BE Semiconductor and Associated British go up and down completely randomly.
Pair Corralation between BE Semiconductor and Associated British
Assuming the 90 days trading horizon BE Semiconductor Industries is expected to generate 1.8 times more return on investment than Associated British. However, BE Semiconductor is 1.8 times more volatile than Associated British Foods. It trades about 0.07 of its potential returns per unit of risk. Associated British Foods is currently generating about 0.06 per unit of risk. If you would invest 11,295 in BE Semiconductor Industries on September 12, 2024 and sell it today you would earn a total of 1,220 from holding BE Semiconductor Industries or generate 10.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BE Semiconductor Industries vs. Associated British Foods
Performance |
| Timeline |
| BE Semiconductor Ind |
| Associated British Foods |
BE Semiconductor and Associated British Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BE Semiconductor and Associated British
The main advantage of trading using opposite BE Semiconductor and Associated British positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BE Semiconductor position performs unexpectedly, Associated British 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 Associated British will offset losses from the drop in Associated British's long position.| BE Semiconductor vs. Apple Inc | BE Semiconductor vs. Apple Inc | BE Semiconductor vs. Apple Inc | BE Semiconductor vs. Apple Inc |
| Associated British vs. Hormel Foods | Associated British vs. Superior Plus Corp | Associated British vs. SIVERS SEMICONDUCTORS AB | Associated British vs. NorAm Drilling AS |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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