Correlation Between BE Semiconductor and ASM International

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Can any of the company-specific risk be diversified away by investing in both BE Semiconductor and ASM International 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 BE Semiconductor and ASM International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BE Semiconductor Industries and ASM International NV, you can compare the effects of market volatilities on BE Semiconductor and ASM International 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 BE Semiconductor with a short position of ASM International. Check out your portfolio center. Please also check ongoing floating volatility patterns of BE Semiconductor and ASM International.

Diversification Opportunities for BE Semiconductor and ASM International

0.3
  Correlation Coefficient

Weak diversification

The 3 months correlation between BESIY and ASM is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding BE Semiconductor Industries and ASM International NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASM International and BE Semiconductor 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 BE Semiconductor Industries are associated (or correlated) with ASM International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASM International has no effect on the direction of BE Semiconductor i.e., BE Semiconductor and ASM International go up and down completely randomly.

Pair Corralation between BE Semiconductor and ASM International

Assuming the 90 days horizon BE Semiconductor Industries is expected to generate 1.44 times more return on investment than ASM International. However, BE Semiconductor is 1.44 times more volatile than ASM International NV. It trades about 0.23 of its potential returns per unit of risk. ASM International NV is currently generating about 0.22 per unit of risk. If you would invest  13,351  in BE Semiconductor Industries on October 9, 2024 and sell it today you would earn a total of  1,347  from holding BE Semiconductor Industries or generate 10.09% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

BE Semiconductor Industries  vs.  ASM International NV

 Performance 
       Timeline  
BE Semiconductor Ind 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in BE Semiconductor Industries are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward indicators, BE Semiconductor showed solid returns over the last few months and may actually be approaching a breakup point.
ASM International 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days ASM International NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

BE Semiconductor and ASM International Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with BE Semiconductor and ASM International

The main advantage of trading using opposite BE Semiconductor and ASM International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BE Semiconductor position performs unexpectedly, ASM International 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 ASM International will offset losses from the drop in ASM International's long position.
The idea behind BE Semiconductor Industries and ASM International NV 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.

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