Correlation Between Benchmark Electronics and Ieh Corp

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

By analyzing existing cross correlation between Benchmark Electronics and Ieh Corp, you can compare the effects of market volatilities on Benchmark Electronics and Ieh Corp 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 Ieh Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Benchmark Electronics and Ieh Corp.

Diversification Opportunities for Benchmark Electronics and Ieh Corp

0.08

Correlation Coefficient

Benchmark Electronics  Ieh Corp

Significant diversification

The 3 months correlation between Benchmark and Ieh is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Benchmark Electronics and Ieh Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ieh Corp 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 Ieh Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ieh Corp has no effect on the direction of Benchmark Electronics i.e., Benchmark Electronics and Ieh Corp go up and down completely randomly.

Pair Corralation between Benchmark Electronics and Ieh Corp

Considering the 90-day investment horizon Benchmark Electronics is expected to generate 0.42 times more return on investment than Ieh Corp. However, Benchmark Electronics is 2.4 times less risky than Ieh Corp. It trades about 0.13 of its potential returns per unit of risk. Ieh Corp is currently generating about 0.01 per unit of risk. If you would invest  4,063  in Benchmark Electronics on August 31, 2024 and sell it today you would earn a total of  742.00  from holding Benchmark Electronics or generate 18.26% return on investment over 90 days.

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

Benchmark Electronics  vs.  Ieh Corp

Benchmark Electronics

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Benchmark Electronics are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical indicators, Benchmark Electronics exhibited solid returns over the last few months and may actually be approaching a breakup point.

Ieh Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ieh Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical indicators, Ieh Corp is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Benchmark Electronics and Ieh Corp

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

The idea behind Benchmark Electronics and Ieh Corp 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.