Correlation Between BE Semiconductor and Haverty Furniture

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

Diversification Opportunities for BE Semiconductor and Haverty Furniture

-0.27

Correlation Coefficient

BE Semiconductor  Haverty Furniture

Very good diversification

The 3 months correlation between BSI and Haverty is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding BE Semiconductor Industries and Haverty Furniture Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haverty Furniture 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 Haverty Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haverty Furniture has no effect on the direction of BE Semiconductor i.e., BE Semiconductor and Haverty Furniture go up and down completely randomly.

Pair Corralation between BE Semiconductor and Haverty Furniture

Assuming the 90 days trading horizon BE Semiconductor Industries is expected to generate 1.28 times more return on investment than Haverty Furniture. However, BE Semiconductor is 1.28 times more volatile than Haverty Furniture Companies. It trades about 0.0 of its potential returns per unit of risk. Haverty Furniture Companies is currently generating about -0.06 per unit of risk. If you would invest  15,559  in BE Semiconductor Industries on October 17, 2024 and sell it today you would lose (1,669) from holding BE Semiconductor Industries or give up 10.73% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.56%
Values	Daily Returns

BE Semiconductor Industries  vs.  Haverty Furniture Companies

BE Semiconductor Ind

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BE Semiconductor Industries are ranked lower than 17 (%) 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.

Haverty Furniture

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Haverty Furniture Companies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain 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.

Pair Trading with BE Semiconductor and Haverty Furniture

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

The idea behind BE Semiconductor Industries and Haverty Furniture Companies 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.