Correlation Between BE Semiconductor and Holland Colours

Can any of the company-specific risk be diversified away by investing in both BE Semiconductor and Holland Colours 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 Holland Colours 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 Holland Colours NV, you can compare the effects of market volatilities on BE Semiconductor and Holland Colours 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 Holland Colours. Check out your portfolio center. Please also check ongoing floating volatility patterns of BE Semiconductor and Holland Colours.

Diversification Opportunities for BE Semiconductor and Holland Colours

0.77

Correlation Coefficient

BE Semiconductor  Holland Colours

Poor diversification

The 3 months correlation between BESI and Holland is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding BE Semiconductor Industries and Holland Colours NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holland Colours 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 Holland Colours. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holland Colours NV has no effect on the direction of BE Semiconductor i.e., BE Semiconductor and Holland Colours go up and down completely randomly.

Pair Corralation between BE Semiconductor and Holland Colours

Assuming the 90 days trading horizon BE Semiconductor Industries is expected to generate 1.3 times more return on investment than Holland Colours. However, BE Semiconductor is 1.3 times more volatile than Holland Colours NV. It trades about 0.19 of its potential returns per unit of risk. Holland Colours NV is currently generating about 0.17 per unit of risk. If you would invest  9,356  in BE Semiconductor Industries on April 24, 2025 and sell it today you would earn a total of  3,224  from holding BE Semiconductor Industries or generate 34.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

BE Semiconductor Industries  vs.  Holland Colours NV

BE Semiconductor Ind

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BE Semiconductor Industries are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, BE Semiconductor unveiled solid returns over the last few months and may actually be approaching a breakup point.

Holland Colours NV

Risk-Adjusted Performance

Good

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

Pair Trading with BE Semiconductor and Holland Colours

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

The idea behind BE Semiconductor Industries and Holland Colours 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.

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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.