Correlation Between BE Semiconductor and CCL Industries

Can any of the company-specific risk be diversified away by investing in both BE Semiconductor and CCL Industries 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 CCL Industries 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 CCL Industries, you can compare the effects of market volatilities on BE Semiconductor and CCL Industries 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 CCL Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of BE Semiconductor and CCL Industries.

Diversification Opportunities for BE Semiconductor and CCL Industries

-0.89

Correlation Coefficient

BE Semiconductor  CCL Industries

Pay attention - limited upside

The 3 months correlation between BSI and CCL is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding BE Semiconductor Industries and CCL Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CCL Industries 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 CCL Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CCL Industries has no effect on the direction of BE Semiconductor i.e., BE Semiconductor and CCL Industries go up and down completely randomly.

Pair Corralation between BE Semiconductor and CCL Industries

Assuming the 90 days trading horizon BE Semiconductor Industries is expected to generate 2.07 times more return on investment than CCL Industries. However, BE Semiconductor is 2.07 times more volatile than CCL Industries. It trades about 0.05 of its potential returns per unit of risk. CCL Industries is currently generating about 0.02 per unit of risk. If you would invest  9,677  in BE Semiconductor Industries on October 24, 2024 and sell it today you would earn a total of  4,888  from holding BE Semiconductor Industries or generate 50.51% return on investment over 90 days.

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

BE Semiconductor Industries  vs.  CCL Industries

BE Semiconductor Ind

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BE Semiconductor Industries are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, BE Semiconductor unveiled solid returns over the last few months and may actually be approaching a breakup point.

CCL Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CCL Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with BE Semiconductor and CCL Industries

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

The idea behind BE Semiconductor Industries and CCL 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.