Correlation Between Benchmark Electronics and Flex

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

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

Diversification Opportunities for Benchmark Electronics and Flex

0.83

Correlation Coefficient

Benchmark Electronics  Flex

Very poor diversification

The 3 months correlation between Benchmark and Flex is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Benchmark Electronics and Flex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flex and Benchmark Electronics 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 Benchmark Electronics are associated (or correlated) with Flex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flex has no effect on the direction of Benchmark Electronics i.e., Benchmark Electronics and Flex go up and down completely randomly.

Pair Corralation between Benchmark Electronics and Flex

Considering the 90-day investment horizon Benchmark Electronics is expected to generate 2.02 times less return on investment than Flex. But when comparing it to its historical volatility, Benchmark Electronics is 1.23 times less risky than Flex. It trades about 0.2 of its potential returns per unit of risk. Flex is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest  3,434  in Flex on April 30, 2025 and sell it today you would earn a total of  1,615  from holding Flex or generate 47.03% return on investment over 90 days.

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

Benchmark Electronics  vs.  Flex

Benchmark Electronics

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Benchmark Electronics are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical indicators, Benchmark Electronics exhibited solid returns over the last few months and may actually be approaching a breakup point.

Flex

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Flex are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating technical and fundamental indicators, Flex showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Benchmark Electronics and Flex

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

The idea behind Benchmark Electronics and Flex 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..