Can any of the company-specific risk be diversified away by investing in both BE Semiconductor and Vastned Retail 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 Vastned Retail 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 Vastned Retail NV, you can compare the effects of market volatilities on BE Semiconductor and Vastned Retail 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 Vastned Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of BE Semiconductor and Vastned Retail.
Diversification Opportunities for BE Semiconductor and Vastned Retail
The 3 months correlation between BESI and Vastned is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding BE Semiconductor Industries and Vastned Retail NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vastned Retail 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 Vastned Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vastned Retail NV has no effect on the direction of BE Semiconductor i.e., BE Semiconductor and Vastned Retail go up and down completely randomly.
Pair Corralation between BE Semiconductor and Vastned Retail
Assuming the 90 days trading horizon BE Semiconductor Industries is expected to under-perform the Vastned Retail. In addition to that, BE Semiconductor is 2.6 times more volatile than Vastned Retail NV. It trades about -0.1 of its total potential returns per unit of risk. Vastned Retail NV is currently generating about 0.26 per unit of volatility. If you would invest 2,009 in Vastned Retail NV on March 6, 2024 and sell it today you would earn a total of 431.00 from holding Vastned Retail NV or generate 21.45% return on investment over 90 days.
Over the last 90 days BE Semiconductor Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in July 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.
Compared to the overall equity markets, risk-adjusted returns on investments in Vastned Retail NV are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Vastned Retail sustained solid returns over the last few months and may actually be approaching a breakup point.