Correlation Between CapitaLand Investment and Tower Semiconductor
Can any of the company-specific risk be diversified away by investing in both CapitaLand Investment 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 CapitaLand Investment and Tower Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CapitaLand Investment Limited and Tower Semiconductor, you can compare the effects of market volatilities on CapitaLand Investment 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 CapitaLand Investment with a short position of Tower Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of CapitaLand Investment and Tower Semiconductor.
Diversification Opportunities for CapitaLand Investment and Tower Semiconductor
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between CapitaLand and Tower is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding CapitaLand Investment Limited and Tower Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tower Semiconductor and CapitaLand Investment 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 CapitaLand Investment Limited 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 CapitaLand Investment i.e., CapitaLand Investment and Tower Semiconductor go up and down completely randomly.
Pair Corralation between CapitaLand Investment and Tower Semiconductor
Assuming the 90 days horizon CapitaLand Investment Limited is expected to under-perform the Tower Semiconductor. But the pink sheet apears to be less risky and, when comparing its historical volatility, CapitaLand Investment Limited is 2.1 times less risky than Tower Semiconductor. The pink sheet trades about -0.21 of its potential returns per unit of risk. The Tower Semiconductor is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 4,477 in Tower Semiconductor on August 26, 2024 and sell it today you would earn a total of 306.00 from holding Tower Semiconductor or generate 6.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CapitaLand Investment Limited vs. Tower Semiconductor
Performance |
| Timeline |
| CapitaLand Investment |
| Tower Semiconductor |
CapitaLand Investment and Tower Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CapitaLand Investment and Tower Semiconductor
The main advantage of trading using opposite CapitaLand Investment and Tower Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CapitaLand Investment 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.| CapitaLand Investment vs. IRSA Inversiones Y | CapitaLand Investment vs. Anywhere Real Estate | CapitaLand Investment vs. Newmark Group | CapitaLand Investment vs. New York City |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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