Correlation Between BE Semiconductor and Trellus Health

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

Diversification Opportunities for BE Semiconductor and Trellus Health

-0.59

Correlation Coefficient

BE Semiconductor  Trellus Health

Excellent diversification

The 3 months correlation between 0XVE and Trellus is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding BE Semiconductor Industries and Trellus Health plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trellus Health plc 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 Trellus Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trellus Health plc has no effect on the direction of BE Semiconductor i.e., BE Semiconductor and Trellus Health go up and down completely randomly.

Pair Corralation between BE Semiconductor and Trellus Health

Assuming the 90 days trading horizon BE Semiconductor Industries is expected to generate 0.54 times more return on investment than Trellus Health. However, BE Semiconductor Industries is 1.87 times less risky than Trellus Health. It trades about 0.08 of its potential returns per unit of risk. Trellus Health plc is currently generating about -0.08 per unit of risk. If you would invest  5,991  in BE Semiconductor Industries on October 11, 2024 and sell it today you would earn a total of  8,439  from holding BE Semiconductor Industries or generate 140.86% return on investment over 90 days.

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

BE Semiconductor Industries  vs.  Trellus Health plc

BE Semiconductor Ind

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BE Semiconductor Industries are ranked lower than 13 (%) 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.

Trellus Health plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Trellus Health plc 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 February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with BE Semiconductor and Trellus Health

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

The idea behind BE Semiconductor Industries and Trellus Health plc 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.