Correlation Between Deswell Industries and Bel Fuse
Can any of the company-specific risk be diversified away by investing in both Deswell Industries and Bel Fuse 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 Deswell Industries and Bel Fuse into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deswell Industries and Bel Fuse A, you can compare the effects of market volatilities on Deswell Industries and Bel Fuse 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 Deswell Industries with a short position of Bel Fuse. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deswell Industries and Bel Fuse.
Diversification Opportunities for Deswell Industries and Bel Fuse
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Deswell and Bel is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Deswell Industries and Bel Fuse A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bel Fuse A and Deswell Industries 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 Deswell Industries are associated (or correlated) with Bel Fuse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bel Fuse A has no effect on the direction of Deswell Industries i.e., Deswell Industries and Bel Fuse go up and down completely randomly.
Pair Corralation between Deswell Industries and Bel Fuse
Given the investment horizon of 90 days Deswell Industries is expected to generate 0.73 times more return on investment than Bel Fuse. However, Deswell Industries is 1.37 times less risky than Bel Fuse. It trades about 0.15 of its potential returns per unit of risk. Bel Fuse A is currently generating about -0.13 per unit of risk. If you would invest 258.00 in Deswell Industries on August 27, 2024 and sell it today you would earn a total of 12.00 from holding Deswell Industries or generate 4.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Deswell Industries vs. Bel Fuse A
Performance |
| Timeline |
| Deswell Industries |
| Bel Fuse A |
Deswell Industries and Bel Fuse Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deswell Industries and Bel Fuse
The main advantage of trading using opposite Deswell Industries and Bel Fuse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deswell Industries position performs unexpectedly, Bel Fuse 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 Bel Fuse will offset losses from the drop in Bel Fuse's long position.| Deswell Industries vs. Ieh Corp | Deswell Industries vs. LGL Group | Deswell Industries vs. Micropac Industries | Deswell Industries vs. SigmaTron International |
| Bel Fuse vs. Richardson Electronics | Bel Fuse vs. LSI Industries | Bel Fuse vs. Benchmark Electronics | Bel Fuse vs. Plexus Corp |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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