Correlation Between Micropac Industries and Bel Fuse

Can any of the company-specific risk be diversified away by investing in both Micropac Industries and Bel Fuse 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 Micropac Industries and Bel Fuse into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Micropac Industries and Bel Fuse B, you can compare the effects of market volatilities on Micropac Industries and Bel Fuse 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 Micropac Industries with a short position of Bel Fuse. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micropac Industries and Bel Fuse.

Diversification Opportunities for Micropac Industries and Bel Fuse

0.0

Correlation Coefficient

Micropac Industries  Bel Fuse

Pay attention - limited upside

The 3 months correlation between Micropac and Bel is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Micropac Industries and Bel Fuse B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bel Fuse B and Micropac Industries 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 Micropac Industries are associated (or correlated) with Bel Fuse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bel Fuse B has no effect on the direction of Micropac Industries i.e., Micropac Industries and Bel Fuse go up and down completely randomly.

Pair Corralation between Micropac Industries and Bel Fuse

If you would invest  8,300  in Bel Fuse B on November 29, 2024 and sell it today you would earn a total of  34.00  from holding Bel Fuse B or generate 0.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Micropac Industries  vs.  Bel Fuse B

Micropac Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Micropac Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Micropac Industries is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Bel Fuse B

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bel Fuse B are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Bel Fuse is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Micropac Industries and Bel Fuse

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

The idea behind Micropac Industries and Bel Fuse B 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.