Correlation Between Benchmark Electronics and Alps Electric

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

By analyzing existing cross correlation between Benchmark Electronics and Alps Electric Co, you can compare the effects of market volatilities on Benchmark Electronics and Alps Electric 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 Benchmark Electronics with a short position of Alps Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Benchmark Electronics and Alps Electric.

Diversification Opportunities for Benchmark Electronics and Alps Electric

-0.68

Correlation Coefficient

Benchmark Electronics  Alps Electric

Excellent diversification

The 3 months correlation between Benchmark and Alps is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Benchmark Electronics and Alps Electric Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alps Electric and Benchmark Electronics 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 Benchmark Electronics are associated (or correlated) with Alps Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alps Electric has no effect on the direction of Benchmark Electronics i.e., Benchmark Electronics and Alps Electric go up and down completely randomly.

Pair Corralation between Benchmark Electronics and Alps Electric

Considering the 90-day investment horizon Benchmark Electronics is expected to under-perform the Alps Electric. But the stock apears to be less risky and, when comparing its historical volatility, Benchmark Electronics is 1.07 times less risky than Alps Electric. The stock trades about -0.1 of its potential returns per unit of risk. The Alps Electric Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,046  in Alps Electric Co on December 28, 2024 and sell it today you would earn a total of  63.00  from holding Alps Electric Co or generate 3.08% return on investment over 90 days.

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

Benchmark Electronics  vs.  Alps Electric Co

Benchmark Electronics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Benchmark Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Alps Electric

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alps Electric Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong essential indicators, Alps Electric is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Benchmark Electronics and Alps Electric

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

The idea behind Benchmark Electronics and Alps Electric Co 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.

Check out your portfolio center.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.