Correlation Between Seven West and BE Semiconductor

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

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

Diversification Opportunities for Seven West and BE Semiconductor

-0.67

Correlation Coefficient

Seven West  BE Semiconductor

Excellent diversification

The 3 months correlation between Seven and BSI is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Seven West Media 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 Seven West 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 Seven West Media 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 Seven West i.e., Seven West and BE Semiconductor go up and down completely randomly.

Pair Corralation between Seven West and BE Semiconductor

Assuming the 90 days horizon Seven West Media is expected to under-perform the BE Semiconductor. In addition to that, Seven West is 3.91 times more volatile than BE Semiconductor Industries. It trades about -0.03 of its total potential returns per unit of risk. BE Semiconductor Industries is currently generating about 0.44 per unit of volatility. If you would invest  11,700  in BE Semiconductor Industries on October 5, 2024 and sell it today you would earn a total of  1,820  from holding BE Semiconductor Industries or generate 15.56% return on investment over 90 days.

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

Seven West Media  vs.  BE Semiconductor Industries

Seven West Media

Risk-Adjusted Performance

0 of 100

Very Weak

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

BE Semiconductor Ind

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BE Semiconductor Industries are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, BE Semiconductor unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Seven West and BE Semiconductor

The main advantage of trading using opposite Seven West and BE Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seven West 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 Seven West Media 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.