Correlation Between BE Semiconductor and Nomura Holdings
Can any of the company-specific risk be diversified away by investing in both BE Semiconductor and Nomura Holdings 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 Nomura Holdings 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 Nomura Holdings, you can compare the effects of market volatilities on BE Semiconductor and Nomura Holdings 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 Nomura Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of BE Semiconductor and Nomura Holdings.
Diversification Opportunities for BE Semiconductor and Nomura Holdings
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between BSI and Nomura is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding BE Semiconductor Industries and Nomura Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nomura Holdings 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 Nomura Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nomura Holdings has no effect on the direction of BE Semiconductor i.e., BE Semiconductor and Nomura Holdings go up and down completely randomly.
Pair Corralation between BE Semiconductor and Nomura Holdings
Assuming the 90 days trading horizon BE Semiconductor Industries is expected to under-perform the Nomura Holdings. In addition to that, BE Semiconductor is 1.56 times more volatile than Nomura Holdings. It trades about -0.23 of its total potential returns per unit of risk. Nomura Holdings is currently generating about 0.35 per unit of volatility. If you would invest 550.00 in Nomura Holdings on November 9, 2024 and sell it today you would earn a total of 96.00 from holding Nomura Holdings or generate 17.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BE Semiconductor Industries vs. Nomura Holdings
Performance |
| Timeline |
| BE Semiconductor Ind |
| Nomura Holdings |
BE Semiconductor and Nomura Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BE Semiconductor and Nomura Holdings
The main advantage of trading using opposite BE Semiconductor and Nomura Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BE Semiconductor position performs unexpectedly, Nomura Holdings 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 Nomura Holdings will offset losses from the drop in Nomura Holdings' long position.| BE Semiconductor vs. Southwest Airlines Co | BE Semiconductor vs. Mitsui Chemicals | BE Semiconductor vs. AEGEAN AIRLINES | BE Semiconductor vs. SINGAPORE AIRLINES |
| Nomura Holdings vs. Hitachi Construction Machinery | Nomura Holdings vs. WIMFARM SA EO | Nomura Holdings vs. Rocket Internet SE | Nomura Holdings vs. Sumitomo Mitsui Construction |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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