Correlation Between Advanced Medical and BE Semiconductor

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

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

Diversification Opportunities for Advanced Medical and BE Semiconductor

-0.19

Correlation Coefficient

Advanced Medical  BE Semiconductor

Good diversification

The 3 months correlation between Advanced and BSI is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Medical Solutions 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 Advanced Medical 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 Advanced Medical Solutions 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 Advanced Medical i.e., Advanced Medical and BE Semiconductor go up and down completely randomly.

Pair Corralation between Advanced Medical and BE Semiconductor

Assuming the 90 days trading horizon Advanced Medical is expected to generate 8.28 times less return on investment than BE Semiconductor. In addition to that, Advanced Medical is 1.15 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 0.14 per unit of volatility. If you would invest  11,030  in BE Semiconductor Industries on October 7, 2024 and sell it today you would earn a total of  2,490  from holding BE Semiconductor Industries or generate 22.57% return on investment over 90 days.

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

Advanced Medical Solutions  vs.  BE Semiconductor Industries

Advanced Medical Sol

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Medical Solutions are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Advanced Medical is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

BE Semiconductor Ind

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BE Semiconductor Industries are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, BE Semiconductor unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Advanced Medical and BE Semiconductor

The main advantage of trading using opposite Advanced Medical and BE Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Medical 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 Advanced Medical Solutions 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.