Correlation Between BE Semiconductor and National Bank

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

Diversification Opportunities for BE Semiconductor and National Bank

0.14

Correlation Coefficient

BE Semiconductor  National Bank

Average diversification

The 3 months correlation between BSI and National is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding BE Semiconductor Industries and National Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank 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 National Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Bank has no effect on the direction of BE Semiconductor i.e., BE Semiconductor and National Bank go up and down completely randomly.

Pair Corralation between BE Semiconductor and National Bank

Assuming the 90 days trading horizon BE Semiconductor Industries is expected to generate 3.23 times more return on investment than National Bank. However, BE Semiconductor is 3.23 times more volatile than National Bank of. It trades about 0.08 of its potential returns per unit of risk. National Bank of is currently generating about 0.05 per unit of risk. If you would invest  13,330  in BE Semiconductor Industries on October 25, 2024 and sell it today you would earn a total of  485.00  from holding BE Semiconductor Industries or generate 3.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

BE Semiconductor Industries  vs.  National Bank of

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 uncertain basic indicators, BE Semiconductor unveiled solid returns over the last few months and may actually be approaching a breakup point.

National Bank

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in National Bank of are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, National Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with BE Semiconductor and National Bank

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

The idea behind BE Semiconductor Industries and National Bank of 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.