Correlation Between Bel Fuse and Amphenol

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

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

Diversification Opportunities for Bel Fuse and Amphenol

-0.52

Correlation Coefficient

Bel Fuse  Amphenol

Excellent diversification

The 3 months correlation between Bel and Amphenol is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Bel Fuse B and Amphenol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amphenol and Bel Fuse 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 Bel Fuse B are associated (or correlated) with Amphenol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amphenol has no effect on the direction of Bel Fuse i.e., Bel Fuse and Amphenol go up and down completely randomly.

Pair Corralation between Bel Fuse and Amphenol

Assuming the 90 days horizon Bel Fuse B is expected to under-perform the Amphenol. In addition to that, Bel Fuse is 1.44 times more volatile than Amphenol. It trades about -0.04 of its total potential returns per unit of risk. Amphenol is currently generating about 0.25 per unit of volatility. If you would invest  11,405  in Amphenol on January 31, 2024 and sell it today you would earn a total of  808.00  from holding Amphenol or generate 7.08% return on investment over 90 days.

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

Bel Fuse B  vs.  Amphenol

Bel Fuse B

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bel Fuse B has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Bel Fuse is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Amphenol

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Amphenol are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Amphenol demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bel Fuse and Amphenol

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

The idea behind Bel Fuse B and Amphenol 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.