Correlation Between NN Group and BE Semiconductor

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

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

Diversification Opportunities for NN Group and BE Semiconductor

-0.8

Correlation Coefficient

NN Group  BE Semiconductor

Pay attention - limited upside

The 3 months correlation between NN Group and BESI is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding NN Group NV 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 NN Group 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 NN Group NV 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 NN Group i.e., NN Group and BE Semiconductor go up and down completely randomly.

Pair Corralation between NN Group and BE Semiconductor

Assuming the 90 days horizon NN Group NV is expected to under-perform the BE Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, NN Group NV is 3.26 times less risky than BE Semiconductor. The stock trades about -0.06 of its potential returns per unit of risk. The BE Semiconductor Industries is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  11,315  in BE Semiconductor Industries on September 13, 2024 and sell it today you would earn a total of  1,355  from holding BE Semiconductor Industries or generate 11.98% return on investment over 90 days.

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

NN Group NV  vs.  BE Semiconductor Industries

NN Group NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NN Group NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, NN Group is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

BE Semiconductor Ind

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BE Semiconductor Industries are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, BE Semiconductor unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NN Group and BE Semiconductor

The main advantage of trading using opposite NN Group and BE Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NN Group 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 NN Group NV 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.