Correlation Between TELES Informationstech and BE Semiconductor

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

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

Diversification Opportunities for TELES Informationstech and BE Semiconductor

0.03

Correlation Coefficient

TELES Informationstech  BE Semiconductor

Significant diversification

The 3 months correlation between TELES and BSI is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding TELES Informationstechnologien 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 TELES Informationstech 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 TELES Informationstechnologien AG 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 TELES Informationstech i.e., TELES Informationstech and BE Semiconductor go up and down completely randomly.

Pair Corralation between TELES Informationstech and BE Semiconductor

Assuming the 90 days trading horizon TELES Informationstechnologien AG is expected to under-perform the BE Semiconductor. In addition to that, TELES Informationstech is 1.3 times more volatile than BE Semiconductor Industries. It trades about -0.15 of its total potential returns per unit of risk. BE Semiconductor Industries is currently generating about 0.04 per unit of volatility. If you would invest  11,010  in BE Semiconductor Industries on November 29, 2024 and sell it today you would earn a total of  545.00  from holding BE Semiconductor Industries or generate 4.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

TELES Informationstechnologien  vs.  BE Semiconductor Industries

TELES Informationstech

Risk-Adjusted Performance

Very Weak

Over the last 90 days TELES Informationstechnologien AG 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 forward-looking signals remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

BE Semiconductor Ind

Risk-Adjusted Performance

Insignificant

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

Pair Trading with TELES Informationstech and BE Semiconductor

The main advantage of trading using opposite TELES Informationstech and BE Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TELES Informationstech 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 TELES Informationstechnologien AG 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.