Correlation Between Medical Properties and BE Semiconductor

Can any of the company-specific risk be diversified away by investing in both Medical Properties 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 Medical Properties and BE Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Medical Properties Trust and BE Semiconductor Industries, you can compare the effects of market volatilities on Medical Properties 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 Medical Properties with a short position of BE Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medical Properties and BE Semiconductor.

Diversification Opportunities for Medical Properties and BE Semiconductor

-0.13

Correlation Coefficient

Medical Properties  BE Semiconductor

Good diversification

The 3 months correlation between Medical and 0XVE is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Medical Properties Trust 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 Medical Properties 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 Medical Properties Trust 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 Medical Properties i.e., Medical Properties and BE Semiconductor go up and down completely randomly.

Pair Corralation between Medical Properties and BE Semiconductor

Assuming the 90 days trading horizon Medical Properties Trust is expected to under-perform the BE Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, Medical Properties Trust is 1.06 times less risky than BE Semiconductor. The stock trades about -0.23 of its potential returns per unit of risk. The BE Semiconductor Industries is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  11,247  in BE Semiconductor Industries on September 15, 2024 and sell it today you would earn a total of  1,521  from holding BE Semiconductor Industries or generate 13.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Medical Properties Trust  vs.  BE Semiconductor Industries

Medical Properties Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Medical Properties Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

BE Semiconductor Ind

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BE Semiconductor Industries are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, BE Semiconductor unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Medical Properties and BE Semiconductor

The main advantage of trading using opposite Medical Properties and BE Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medical Properties 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 Medical Properties Trust 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.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.