Correlation Between BE Semiconductor and Charter Communications

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

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

Diversification Opportunities for BE Semiconductor and Charter Communications

-0.49

Correlation Coefficient

BE Semiconductor  Charter Communications

Very good diversification

The 3 months correlation between 0XVE and Charter is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding BE Semiconductor Industries and Charter Communications Cl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charter Communications and BE Semiconductor 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 BE Semiconductor Industries are associated (or correlated) with Charter Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charter Communications has no effect on the direction of BE Semiconductor i.e., BE Semiconductor and Charter Communications go up and down completely randomly.

Pair Corralation between BE Semiconductor and Charter Communications

Assuming the 90 days trading horizon BE Semiconductor Industries is expected to generate 1.14 times more return on investment than Charter Communications. However, BE Semiconductor is 1.14 times more volatile than Charter Communications Cl. It trades about -0.03 of its potential returns per unit of risk. Charter Communications Cl is currently generating about -0.05 per unit of risk. If you would invest  11,381  in BE Semiconductor Industries on December 1, 2024 and sell it today you would lose (756.00) from holding BE Semiconductor Industries or give up 6.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

BE Semiconductor Industries  vs.  Charter Communications Cl

BE Semiconductor Ind

Risk-Adjusted Performance

Very Weak

Over the last 90 days BE Semiconductor Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, BE Semiconductor is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Charter Communications

Risk-Adjusted Performance

Very Weak

Over the last 90 days Charter Communications Cl has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with BE Semiconductor and Charter Communications

The main advantage of trading using opposite BE Semiconductor and Charter Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BE Semiconductor position performs unexpectedly, Charter Communications 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 Charter Communications will offset losses from the drop in Charter Communications' long position.

The idea behind BE Semiconductor Industries and Charter Communications Cl 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.

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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.