Correlation Between Bank of Ireland Group PLC and BE Semiconductor

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

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

Diversification Opportunities for Bank of Ireland Group PLC and BE Semiconductor

-0.41

Correlation Coefficient

Bank of Ireland Group PLC  BE Semiconductor

Very good diversification

The 3 months correlation between Bank and 0XVE is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Ireland 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 Bank of Ireland Group PLC 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 Bank of Ireland 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 Bank of Ireland Group PLC i.e., Bank of Ireland Group PLC and BE Semiconductor go up and down completely randomly.

Pair Corralation between Bank of Ireland Group PLC and BE Semiconductor

Assuming the 90 days trading horizon Bank of Ireland is expected to generate 0.76 times more return on investment than BE Semiconductor. However, Bank of Ireland is 1.31 times less risky than BE Semiconductor. It trades about 0.29 of its potential returns per unit of risk. BE Semiconductor Industries is currently generating about -0.03 per unit of risk. If you would invest  826.00  in Bank of Ireland on December 2, 2024 and sell it today you would earn a total of  316.00  from holding Bank of Ireland or generate 38.26% return on investment over 90 days.

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

Bank of Ireland  vs.  BE Semiconductor Industries

Bank of Ireland Group PLC

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of Ireland are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Bank of Ireland Group PLC unveiled solid returns over the last few months and may actually be approaching a breakup point.

BE Semiconductor Ind

Risk-Adjusted Performance

Very Weak

Over the last 90 days BE Semiconductor Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, BE Semiconductor is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Bank of Ireland Group PLC and BE Semiconductor

The main advantage of trading using opposite Bank of Ireland Group PLC and BE Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Ireland Group PLC 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 Bank of Ireland 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 Global Correlations module to find global opportunities by holding instruments from different markets.