Correlation Between Hua Hong and Tower Semiconductor
Can any of the company-specific risk be diversified away by investing in both Hua Hong and Tower 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 Hua Hong and Tower Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hua Hong Semiconductor and Tower Semiconductor, you can compare the effects of market volatilities on Hua Hong and Tower 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 Hua Hong with a short position of Tower Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hua Hong and Tower Semiconductor.
Diversification Opportunities for Hua Hong and Tower Semiconductor
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hua and Tower is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Hua Hong Semiconductor and Tower Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tower Semiconductor and Hua Hong 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 Hua Hong Semiconductor are associated (or correlated) with Tower Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tower Semiconductor has no effect on the direction of Hua Hong i.e., Hua Hong and Tower Semiconductor go up and down completely randomly.
Pair Corralation between Hua Hong and Tower Semiconductor
Assuming the 90 days horizon Hua Hong is expected to generate 7.82 times less return on investment than Tower Semiconductor. In addition to that, Hua Hong is 1.57 times more volatile than Tower Semiconductor. It trades about 0.0 of its total potential returns per unit of risk. Tower Semiconductor is currently generating about 0.03 per unit of volatility. If you would invest 4,016 in Tower Semiconductor on October 9, 2024 and sell it today you would earn a total of 930.00 from holding Tower Semiconductor or generate 23.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hua Hong Semiconductor vs. Tower Semiconductor
Performance |
| Timeline |
| Hua Hong Semiconductor |
| Tower Semiconductor |
Hua Hong and Tower Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hua Hong and Tower Semiconductor
The main advantage of trading using opposite Hua Hong and Tower Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hua Hong position performs unexpectedly, Tower 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 Tower Semiconductor will offset losses from the drop in Tower Semiconductor's long position.| Hua Hong vs. Coor Service Management | Hua Hong vs. VULCAN MATERIALS | Hua Hong vs. Sims Metal Management | Hua Hong vs. SANOK RUBBER ZY |
| Tower Semiconductor vs. Taiwan Semiconductor Manufacturing | Tower Semiconductor vs. QUALCOMM Incorporated | Tower Semiconductor vs. Advanced Micro Devices | Tower Semiconductor vs. Advanced Micro Devices |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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