Correlation Between Amphenol and Bel Fuse

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

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

Diversification Opportunities for Amphenol and Bel Fuse

0.3

Correlation Coefficient

Amphenol  Bel Fuse

Weak diversification

The 3 months correlation between Amphenol and Bel is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Amphenol and Bel Fuse A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bel Fuse A and Amphenol 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 Amphenol 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 A has no effect on the direction of Amphenol i.e., Amphenol and Bel Fuse go up and down completely randomly.

Pair Corralation between Amphenol and Bel Fuse

Considering the 90-day investment horizon Amphenol is expected to generate 0.68 times more return on investment than Bel Fuse. However, Amphenol is 1.47 times less risky than Bel Fuse. It trades about 0.17 of its potential returns per unit of risk. Bel Fuse A is currently generating about 0.1 per unit of risk. If you would invest  6,175  in Amphenol on September 3, 2024 and sell it today you would earn a total of  1,090  from holding Amphenol or generate 17.65% return on investment over 90 days.

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

Amphenol  vs.  Bel Fuse A

Amphenol

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amphenol are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, Amphenol demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Bel Fuse A

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bel Fuse A are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting technical and fundamental indicators, Bel Fuse sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Amphenol and Bel Fuse

The main advantage of trading using opposite Amphenol and Bel Fuse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amphenol 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 Amphenol and Bel Fuse A 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.

Check out your portfolio center.

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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.