Correlation Between HEALTHSTREAM (HL5SG) and BE Semiconductor

Can any of the company-specific risk be diversified away by investing in both HEALTHSTREAM (HL5SG) and BE Semiconductor 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 HEALTHSTREAM (HL5SG) and BE Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HEALTHSTREAM and BE Semiconductor Industries, you can compare the effects of market volatilities on HEALTHSTREAM (HL5SG) and BE Semiconductor 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 HEALTHSTREAM (HL5SG) with a short position of BE Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of HEALTHSTREAM (HL5SG) and BE Semiconductor.

Diversification Opportunities for HEALTHSTREAM (HL5SG) and BE Semiconductor

0.18

Correlation Coefficient

HEALTHSTREAM (HL5SG)  BE Semiconductor

Average diversification

The 3 months correlation between HEALTHSTREAM and BSI is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding HEALTHSTREAM and BE Semiconductor Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BE Semiconductor Ind and HEALTHSTREAM (HL5SG) 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 HEALTHSTREAM are associated (or correlated) with BE Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BE Semiconductor Ind has no effect on the direction of HEALTHSTREAM (HL5SG) i.e., HEALTHSTREAM (HL5SG) and BE Semiconductor go up and down completely randomly.

Pair Corralation between HEALTHSTREAM (HL5SG) and BE Semiconductor

Assuming the 90 days trading horizon HEALTHSTREAM is expected to generate 0.37 times more return on investment than BE Semiconductor. However, HEALTHSTREAM is 2.7 times less risky than BE Semiconductor. It trades about -0.06 of its potential returns per unit of risk. BE Semiconductor Industries is currently generating about -0.08 per unit of risk. If you would invest  3,057  in HEALTHSTREAM on December 24, 2024 and sell it today you would lose (157.00) from holding HEALTHSTREAM or give up 5.14% of portfolio value over 90 days.

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

HEALTHSTREAM  vs.  BE Semiconductor Industries

HEALTHSTREAM (HL5SG)

Risk-Adjusted Performance

Very Weak

Over the last 90 days HEALTHSTREAM has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, HEALTHSTREAM (HL5SG) is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

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 fragile 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.

Pair Trading with HEALTHSTREAM (HL5SG) and BE Semiconductor

The main advantage of trading using opposite HEALTHSTREAM (HL5SG) and BE Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HEALTHSTREAM (HL5SG) position performs unexpectedly, BE Semiconductor 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 BE Semiconductor will offset losses from the drop in BE Semiconductor's long position.

The idea behind HEALTHSTREAM and BE Semiconductor 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.