Correlation Between KIMBALL ELECTRONICS and Tower Semiconductor
Can any of the company-specific risk be diversified away by investing in both KIMBALL ELECTRONICS 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 KIMBALL ELECTRONICS and Tower Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KIMBALL ELECTRONICS and Tower Semiconductor, you can compare the effects of market volatilities on KIMBALL ELECTRONICS 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 KIMBALL ELECTRONICS with a short position of Tower Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of KIMBALL ELECTRONICS and Tower Semiconductor.
Diversification Opportunities for KIMBALL ELECTRONICS and Tower Semiconductor
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KIMBALL and Tower is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding KIMBALL ELECTRONICS and Tower Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tower Semiconductor and KIMBALL 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 KIMBALL ELECTRONICS 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 KIMBALL ELECTRONICS i.e., KIMBALL ELECTRONICS and Tower Semiconductor go up and down completely randomly.
Pair Corralation between KIMBALL ELECTRONICS and Tower Semiconductor
Assuming the 90 days horizon KIMBALL ELECTRONICS is expected to under-perform the Tower Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, KIMBALL ELECTRONICS is 1.1 times less risky than Tower Semiconductor. The stock trades about -0.05 of its potential returns per unit of risk. The Tower Semiconductor is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 3,740 in Tower Semiconductor on September 21, 2024 and sell it today you would earn a total of 1,179 from holding Tower Semiconductor or generate 31.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KIMBALL ELECTRONICS vs. Tower Semiconductor
Performance |
| Timeline |
| KIMBALL ELECTRONICS |
| Tower Semiconductor |
KIMBALL ELECTRONICS and Tower Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KIMBALL ELECTRONICS and Tower Semiconductor
The main advantage of trading using opposite KIMBALL ELECTRONICS and Tower Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KIMBALL ELECTRONICS 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.| KIMBALL ELECTRONICS vs. Superior Plus Corp | KIMBALL ELECTRONICS vs. SIVERS SEMICONDUCTORS AB | KIMBALL ELECTRONICS vs. Norsk Hydro ASA | KIMBALL ELECTRONICS vs. Reliance Steel Aluminum |
| Tower Semiconductor vs. RETAIL FOOD GROUP | Tower Semiconductor vs. ASSOC BR FOODS | Tower Semiconductor vs. Food Life Companies | Tower Semiconductor vs. MONEYSUPERMARKET |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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