Correlation Between BenQ Materials and Microelectronics

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

By analyzing existing cross correlation between BenQ Materials Corp and Microelectronics Technology, you can compare the effects of market volatilities on BenQ Materials and Microelectronics 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 BenQ Materials with a short position of Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of BenQ Materials and Microelectronics.

Diversification Opportunities for BenQ Materials and Microelectronics

0.61

Correlation Coefficient

BenQ Materials  Microelectronics

Poor diversification

The 3 months correlation between BenQ and Microelectronics is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding BenQ Materials Corp and Microelectronics Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microelectronics Tec and BenQ Materials 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 BenQ Materials Corp are associated (or correlated) with Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microelectronics Tec has no effect on the direction of BenQ Materials i.e., BenQ Materials and Microelectronics go up and down completely randomly.

Pair Corralation between BenQ Materials and Microelectronics

Assuming the 90 days trading horizon BenQ Materials Corp is expected to generate 0.72 times more return on investment than Microelectronics. However, BenQ Materials Corp is 1.39 times less risky than Microelectronics. It trades about 0.05 of its potential returns per unit of risk. Microelectronics Technology is currently generating about 0.0 per unit of risk. If you would invest  3,050  in BenQ Materials Corp on September 13, 2024 and sell it today you would earn a total of  155.00  from holding BenQ Materials Corp or generate 5.08% return on investment over 90 days.

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

BenQ Materials Corp  vs.  Microelectronics Technology

BenQ Materials Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BenQ Materials Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, BenQ Materials is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Microelectronics Tec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Microelectronics Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Microelectronics is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with BenQ Materials and Microelectronics

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

The idea behind BenQ Materials Corp and Microelectronics Technology 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.