Correlation Between BE Semiconductor and Amazon

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Can any of the company-specific risk be diversified away by investing in both BE Semiconductor and Amazon 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 Amazon 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 Amazon Inc, you can compare the effects of market volatilities on BE Semiconductor and Amazon 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 Amazon. Check out your portfolio center. Please also check ongoing floating volatility patterns of BE Semiconductor and Amazon.

Diversification Opportunities for BE Semiconductor and Amazon

0XVEAmazonDiversified Away0XVEAmazonDiversified Away100%
0.16
  Correlation Coefficient

Average diversification

The 3 months correlation between 0XVE and Amazon is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding BE Semiconductor Industries and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc 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 Amazon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon Inc has no effect on the direction of BE Semiconductor i.e., BE Semiconductor and Amazon go up and down completely randomly.

Pair Corralation between BE Semiconductor and Amazon

Assuming the 90 days trading horizon BE Semiconductor is expected to generate 1.4 times less return on investment than Amazon. But when comparing it to its historical volatility, BE Semiconductor Industries is 1.66 times less risky than Amazon. It trades about 0.08 of its potential returns per unit of risk. Amazon Inc is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  20,350  in Amazon Inc on November 19, 2024 and sell it today you would earn a total of  2,500  from holding Amazon Inc or generate 12.29% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

BE Semiconductor Industries  vs.  Amazon Inc

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb 0102030
JavaScript chart by amCharts 3.21.150XVE 0R1O
       Timeline  
BE Semiconductor Ind 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
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 may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb110120130140150
Amazon Inc 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Amazon Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Amazon unveiled solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb190200210220230240

BE Semiconductor and Amazon Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-8.49-6.36-4.23-2.10.02.094.256.418.5710.73 0.0200.0250.0300.0350.0400.0450.0500.055
JavaScript chart by amCharts 3.21.150XVE 0R1O
       Returns  

Pair Trading with BE Semiconductor and Amazon

The main advantage of trading using opposite BE Semiconductor and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BE Semiconductor position performs unexpectedly, Amazon 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 Amazon will offset losses from the drop in Amazon's long position.
The idea behind BE Semiconductor Industries and Amazon Inc 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.

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