Correlation Between Alfen Beheer and BE Semiconductor

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

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

Diversification Opportunities for Alfen Beheer and BE Semiconductor

-0.03

Correlation Coefficient

Alfen Beheer  BE Semiconductor

Good diversification

The 3 months correlation between Alfen and BESI is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Alfen Beheer BV 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 Alfen Beheer 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 Alfen Beheer BV 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 Alfen Beheer i.e., Alfen Beheer and BE Semiconductor go up and down completely randomly.

Pair Corralation between Alfen Beheer and BE Semiconductor

Assuming the 90 days trading horizon Alfen Beheer is expected to generate 50.03 times less return on investment than BE Semiconductor. In addition to that, Alfen Beheer is 1.24 times more volatile than BE Semiconductor Industries. It trades about 0.01 of its total potential returns per unit of risk. BE Semiconductor Industries is currently generating about 0.37 per unit of volatility. If you would invest  12,520  in BE Semiconductor Industries on October 11, 2024 and sell it today you would earn a total of  1,950  from holding BE Semiconductor Industries or generate 15.58% return on investment over 90 days.

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

Alfen Beheer BV  vs.  BE Semiconductor Industries

Alfen Beheer BV

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alfen Beheer BV are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Alfen Beheer is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with Alfen Beheer and BE Semiconductor

The main advantage of trading using opposite Alfen Beheer and BE Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alfen Beheer 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 Alfen Beheer BV 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.