Correlation Between Chongqing Machinery and BE Semiconductor
Can any of the company-specific risk be diversified away by investing in both Chongqing Machinery and BE Semiconductor 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 Chongqing Machinery and BE Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chongqing Machinery Electric and BE Semiconductor Industries, you can compare the effects of market volatilities on Chongqing Machinery and BE Semiconductor 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 Chongqing Machinery with a short position of BE Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chongqing Machinery and BE Semiconductor.
Diversification Opportunities for Chongqing Machinery and BE Semiconductor
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Chongqing and BSI is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Chongqing Machinery Electric and BE Semiconductor Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BE Semiconductor Ind and Chongqing Machinery 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 Chongqing Machinery Electric are associated (or correlated) with BE Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BE Semiconductor Ind has no effect on the direction of Chongqing Machinery i.e., Chongqing Machinery and BE Semiconductor go up and down completely randomly.
Pair Corralation between Chongqing Machinery and BE Semiconductor
Assuming the 90 days horizon Chongqing Machinery Electric is expected to generate 2.8 times more return on investment than BE Semiconductor. However, Chongqing Machinery is 2.8 times more volatile than BE Semiconductor Industries. It trades about 0.0 of its potential returns per unit of risk. BE Semiconductor Industries is currently generating about -0.06 per unit of risk. If you would invest 8.40 in Chongqing Machinery Electric on November 3, 2024 and sell it today you would lose (0.95) from holding Chongqing Machinery Electric or give up 11.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chongqing Machinery Electric vs. BE Semiconductor Industries
Performance |
| Timeline |
| Chongqing Machinery |
| BE Semiconductor Ind |
Chongqing Machinery and BE Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chongqing Machinery and BE Semiconductor
The main advantage of trading using opposite Chongqing Machinery and BE Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chongqing Machinery position performs unexpectedly, BE Semiconductor 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 BE Semiconductor will offset losses from the drop in BE Semiconductor's long position.| Chongqing Machinery vs. MONEYSUPERMARKET | Chongqing Machinery vs. TEXAS ROADHOUSE | Chongqing Machinery vs. TRAINLINE PLC LS | Chongqing Machinery vs. EVS Broadcast Equipment |
| BE Semiconductor vs. SIVERS SEMICONDUCTORS AB | BE Semiconductor vs. NorAm Drilling AS | BE Semiconductor vs. Volkswagen AG | BE Semiconductor vs. Darden Restaurants |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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