Correlation Between Advanced Micro and Tower Semiconductor
Can any of the company-specific risk be diversified away by investing in both Advanced Micro 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 Advanced Micro and Tower Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advanced Micro Devices and Tower Semiconductor, you can compare the effects of market volatilities on Advanced Micro 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 Advanced Micro with a short position of Tower Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Micro and Tower Semiconductor.
Diversification Opportunities for Advanced Micro and Tower Semiconductor
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Advanced and Tower is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Micro Devices and Tower Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tower Semiconductor and Advanced Micro 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 Advanced Micro Devices 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 Advanced Micro i.e., Advanced Micro and Tower Semiconductor go up and down completely randomly.
Pair Corralation between Advanced Micro and Tower Semiconductor
Considering the 90-day investment horizon Advanced Micro Devices is expected to under-perform the Tower Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, Advanced Micro Devices is 1.14 times less risky than Tower Semiconductor. The stock trades about -0.15 of its potential returns per unit of risk. The Tower Semiconductor is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 4,426 in Tower Semiconductor on August 30, 2024 and sell it today you would earn a total of 310.00 from holding Tower Semiconductor or generate 7.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advanced Micro Devices vs. Tower Semiconductor
Performance |
| Timeline |
| Advanced Micro Devices |
| Tower Semiconductor |
Advanced Micro and Tower Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Micro and Tower Semiconductor
The main advantage of trading using opposite Advanced Micro and Tower Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Micro 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.| Advanced Micro vs. Taiwan Semiconductor Manufacturing | Advanced Micro vs. Intel | Advanced Micro vs. Marvell Technology Group | Advanced Micro vs. Micron Technology |
| Tower Semiconductor vs. Nova | Tower Semiconductor vs. AudioCodes | Tower Semiconductor vs. Nice Ltd ADR | Tower Semiconductor vs. Elbit Systems |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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