Correlation Between New Sources and BE Semiconductor
Can any of the company-specific risk be diversified away by investing in both New Sources 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 New Sources and BE Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Sources Energy and BE Semiconductor Industries, you can compare the effects of market volatilities on New Sources 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 New Sources with a short position of BE Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Sources and BE Semiconductor.
Diversification Opportunities for New Sources and BE Semiconductor
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between New and BESI is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding New Sources Energy 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 New Sources 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 New Sources Energy 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 New Sources i.e., New Sources and BE Semiconductor go up and down completely randomly.
Pair Corralation between New Sources and BE Semiconductor
Assuming the 90 days trading horizon New Sources is expected to generate 76.87 times less return on investment than BE Semiconductor. In addition to that, New Sources is 2.09 times more volatile than BE Semiconductor Industries. It trades about 0.0 of its total potential returns per unit of risk. BE Semiconductor Industries is currently generating about 0.26 per unit of volatility. If you would invest 9,794 in BE Semiconductor Industries on September 1, 2024 and sell it today you would earn a total of 1,506 from holding BE Semiconductor Industries or generate 15.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Sources Energy vs. BE Semiconductor Industries
Performance |
| Timeline |
| New Sources Energy |
| BE Semiconductor Ind |
New Sources and BE Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Sources and BE Semiconductor
The main advantage of trading using opposite New Sources and BE Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Sources 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.The idea behind New Sources Energy and BE Semiconductor Industries pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| BE Semiconductor vs. ASM International NV | BE Semiconductor vs. ASML Holding NV | BE Semiconductor vs. ASR Nederland NV | BE Semiconductor vs. Koninklijke Ahold Delhaize |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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