Correlation Between BE Semiconductor and Gap

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

Diversification Opportunities for BE Semiconductor and Gap

0.43

Correlation Coefficient

BE Semiconductor  Gap

Very weak diversification

The 3 months correlation between BSI and Gap is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding BE Semiconductor Industries and The Gap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gap 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 Gap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gap has no effect on the direction of BE Semiconductor i.e., BE Semiconductor and Gap go up and down completely randomly.

Pair Corralation between BE Semiconductor and Gap

Assuming the 90 days trading horizon BE Semiconductor Industries is expected to generate 1.11 times more return on investment than Gap. However, BE Semiconductor is 1.11 times more volatile than The Gap. It trades about -0.06 of its potential returns per unit of risk. The Gap is currently generating about -0.1 per unit of risk. If you would invest  12,655  in BE Semiconductor Industries on December 19, 2024 and sell it today you would lose (2,130) from holding BE Semiconductor Industries or give up 16.83% of portfolio value over 90 days.

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

BE Semiconductor Industries  vs.  The Gap

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 uncertain 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.

Gap

Risk-Adjusted Performance

Very Weak

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

Pair Trading with BE Semiconductor and Gap

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

The idea behind BE Semiconductor Industries and The Gap 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.