Correlation Between BE Semiconductor and PostNL NV

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

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

Diversification Opportunities for BE Semiconductor and PostNL NV

-0.14

Correlation Coefficient

BE Semiconductor  PostNL NV

Good diversification

The 3 months correlation between BESI and PostNL is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding BE Semiconductor Industries and PostNL NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PostNL NV and BE Semiconductor 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 BE Semiconductor Industries are associated (or correlated) with PostNL NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PostNL NV has no effect on the direction of BE Semiconductor i.e., BE Semiconductor and PostNL NV go up and down completely randomly.

Pair Corralation between BE Semiconductor and PostNL NV

Assuming the 90 days trading horizon BE Semiconductor Industries is expected to generate 1.5 times more return on investment than PostNL NV. However, BE Semiconductor is 1.5 times more volatile than PostNL NV. It trades about 0.36 of its potential returns per unit of risk. PostNL NV is currently generating about -0.03 per unit of risk. If you would invest  11,055  in BE Semiconductor Industries on September 19, 2024 and sell it today you would earn a total of  1,795  from holding BE Semiconductor Industries or generate 16.24% return on investment over 90 days.

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

BE Semiconductor Industries  vs.  PostNL NV

BE Semiconductor Ind

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BE Semiconductor Industries are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, BE Semiconductor may actually be approaching a critical reversion point that can send shares even higher in January 2025.

PostNL NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PostNL NV 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 essential indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with BE Semiconductor and PostNL NV

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

The idea behind BE Semiconductor Industries and PostNL NV 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 Transaction History module to view history of all your transactions and understand their impact on performance.