Correlation Between BE Semiconductor and DATANG INTL

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

Diversification Opportunities for BE Semiconductor and DATANG INTL

-0.57

Correlation Coefficient

BE Semiconductor  DATANG INTL

Excellent diversification

The 3 months correlation between BSI and DATANG is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding BE Semiconductor Industries and DATANG INTL POW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DATANG INTL POW 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 DATANG INTL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DATANG INTL POW has no effect on the direction of BE Semiconductor i.e., BE Semiconductor and DATANG INTL go up and down completely randomly.

Pair Corralation between BE Semiconductor and DATANG INTL

Assuming the 90 days trading horizon BE Semiconductor Industries is expected to under-perform the DATANG INTL. In addition to that, BE Semiconductor is 1.11 times more volatile than DATANG INTL POW. It trades about -0.1 of its total potential returns per unit of risk. DATANG INTL POW is currently generating about 0.04 per unit of volatility. If you would invest  17.00  in DATANG INTL POW on December 30, 2024 and sell it today you would earn a total of  1.00  from holding DATANG INTL POW or generate 5.88% return on investment over 90 days.

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

BE Semiconductor Industries  vs.  DATANG INTL POW

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 unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

DATANG INTL POW

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in DATANG INTL POW are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, DATANG INTL may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with BE Semiconductor and DATANG INTL

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

The idea behind BE Semiconductor Industries and DATANG INTL POW 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.