Correlation Between Bel Fuse and Bel Fuse

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

By analyzing existing cross correlation between Bel Fuse A and Bel Fuse B, you can compare the effects of market volatilities on Bel Fuse and Bel Fuse 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 Bel Fuse with a short position of Bel Fuse. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bel Fuse and Bel Fuse.

Diversification Opportunities for Bel Fuse and Bel Fuse

0.36

Correlation Coefficient

Bel Fuse  Bel Fuse

Weak diversification

The 3 months correlation between Bel and Bel is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Bel Fuse A and Bel Fuse B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bel Fuse B and Bel Fuse 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 Bel Fuse A are associated (or correlated) with Bel Fuse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bel Fuse B has no effect on the direction of Bel Fuse i.e., Bel Fuse and Bel Fuse go up and down completely randomly.

Pair Corralation between Bel Fuse and Bel Fuse

Assuming the 90 days horizon Bel Fuse A is expected to under-perform the Bel Fuse. In addition to that, Bel Fuse is 1.2 times more volatile than Bel Fuse B. It trades about -0.09 of its total potential returns per unit of risk. Bel Fuse B is currently generating about 0.09 per unit of volatility. If you would invest  7,526  in Bel Fuse B on November 20, 2024 and sell it today you would earn a total of  706.00  from holding Bel Fuse B or generate 9.38% return on investment over 90 days.

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

Bel Fuse A  vs.  Bel Fuse B

Bel Fuse A

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bel Fuse A has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Bel Fuse B

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bel Fuse B are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady technical and fundamental indicators, Bel Fuse may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Bel Fuse and Bel Fuse

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

The idea behind Bel Fuse A and Bel Fuse B 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.