Correlation Between BE Semiconductor and STMICROELECTRONICS
Can any of the company-specific risk be diversified away by investing in both BE Semiconductor and STMICROELECTRONICS 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 STMICROELECTRONICS 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 STMICROELECTRONICS, you can compare the effects of market volatilities on BE Semiconductor and STMICROELECTRONICS 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 STMICROELECTRONICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of BE Semiconductor and STMICROELECTRONICS.
Diversification Opportunities for BE Semiconductor and STMICROELECTRONICS
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between BSI and STMICROELECTRONICS is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding BE Semiconductor Industries and STMICROELECTRONICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMICROELECTRONICS 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 STMICROELECTRONICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STMICROELECTRONICS has no effect on the direction of BE Semiconductor i.e., BE Semiconductor and STMICROELECTRONICS go up and down completely randomly.
Pair Corralation between BE Semiconductor and STMICROELECTRONICS
Assuming the 90 days trading horizon BE Semiconductor Industries is expected to generate 1.24 times more return on investment than STMICROELECTRONICS. However, BE Semiconductor is 1.24 times more volatile than STMICROELECTRONICS. It trades about 0.1 of its potential returns per unit of risk. STMICROELECTRONICS is currently generating about -0.16 per unit of risk. If you would invest 10,235 in BE Semiconductor Industries on August 31, 2024 and sell it today you would earn a total of 565.00 from holding BE Semiconductor Industries or generate 5.52% 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. STMICROELECTRONICS
Performance |
| Timeline |
| BE Semiconductor Ind |
| STMICROELECTRONICS |
BE Semiconductor and STMICROELECTRONICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BE Semiconductor and STMICROELECTRONICS
The main advantage of trading using opposite BE Semiconductor and STMICROELECTRONICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BE Semiconductor position performs unexpectedly, STMICROELECTRONICS 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 STMICROELECTRONICS will offset losses from the drop in STMICROELECTRONICS's long position.| BE Semiconductor vs. Apple Inc | BE Semiconductor vs. Apple Inc | BE Semiconductor vs. Apple Inc | BE Semiconductor vs. Apple Inc |
| STMICROELECTRONICS vs. SIVERS SEMICONDUCTORS AB | STMICROELECTRONICS vs. Darden Restaurants | STMICROELECTRONICS vs. Reliance Steel Aluminum | STMICROELECTRONICS vs. Q2M Managementberatung AG |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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