Correlation Between Compass Group and BE Semiconductor
Can any of the company-specific risk be diversified away by investing in both Compass Group 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 Compass Group and BE Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compass Group PLC and BE Semiconductor Industries, you can compare the effects of market volatilities on Compass Group 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 Compass Group with a short position of BE Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compass Group and BE Semiconductor.
Diversification Opportunities for Compass Group and BE Semiconductor
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Compass and 0XVE is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Compass Group PLC 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 Compass Group 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 Compass Group PLC 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 Compass Group i.e., Compass Group and BE Semiconductor go up and down completely randomly.
Pair Corralation between Compass Group and BE Semiconductor
Assuming the 90 days trading horizon Compass Group PLC is expected to generate 0.46 times more return on investment than BE Semiconductor. However, Compass Group PLC is 2.17 times less risky than BE Semiconductor. It trades about 0.2 of its potential returns per unit of risk. BE Semiconductor Industries is currently generating about -0.38 per unit of risk. If you would invest 259,054 in Compass Group PLC on November 8, 2024 and sell it today you would earn a total of 14,346 from holding Compass Group PLC or generate 5.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compass Group PLC vs. BE Semiconductor Industries
Performance |
| Timeline |
| Compass Group PLC |
| BE Semiconductor Ind |
Compass Group and BE Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compass Group and BE Semiconductor
The main advantage of trading using opposite Compass Group and BE Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compass Group 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.| Compass Group vs. National Beverage Corp | Compass Group vs. Premier Foods PLC | Compass Group vs. Delta Air Lines | Compass Group vs. Trainline Plc |
| BE Semiconductor vs. Albion Technology General | BE Semiconductor vs. Morgan Advanced Materials | BE Semiconductor vs. Dolly Varden Silver | BE Semiconductor vs. Alfa Financial Software |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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