Correlation Between NEW MILLENNIUM and BE Semiconductor

Can any of the company-specific risk be diversified away by investing in both NEW MILLENNIUM 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 MILLENNIUM 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 MILLENNIUM IRON and BE Semiconductor Industries, you can compare the effects of market volatilities on NEW MILLENNIUM 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 MILLENNIUM with a short position of BE Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEW MILLENNIUM and BE Semiconductor.

Diversification Opportunities for NEW MILLENNIUM and BE Semiconductor

0.83

Correlation Coefficient

NEW MILLENNIUM  BE Semiconductor

Very poor diversification

The 3 months correlation between NEW and BSI is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding NEW MILLENNIUM IRON 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 MILLENNIUM 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 MILLENNIUM IRON 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 MILLENNIUM i.e., NEW MILLENNIUM and BE Semiconductor go up and down completely randomly.

Pair Corralation between NEW MILLENNIUM and BE Semiconductor

Assuming the 90 days trading horizon NEW MILLENNIUM IRON is expected to generate 0.59 times more return on investment than BE Semiconductor. However, NEW MILLENNIUM IRON is 1.69 times less risky than BE Semiconductor. It trades about -0.08 of its potential returns per unit of risk. BE Semiconductor Industries is currently generating about -0.06 per unit of risk. If you would invest  730.00  in NEW MILLENNIUM IRON on December 19, 2024 and sell it today you would lose (85.00) from holding NEW MILLENNIUM IRON or give up 11.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.33%
Values	Daily Returns

NEW MILLENNIUM IRON  vs.  BE Semiconductor Industries

NEW MILLENNIUM IRON

Risk-Adjusted Performance

Very Weak

Over the last 90 days NEW MILLENNIUM IRON 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 sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

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 uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with NEW MILLENNIUM and BE Semiconductor

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

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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.