Correlation Between Erste Group and Tower Semiconductor
Can any of the company-specific risk be diversified away by investing in both Erste Group 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 Erste Group and Tower Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Erste Group Bank and Tower Semiconductor, you can compare the effects of market volatilities on Erste Group 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 Erste Group with a short position of Tower Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erste Group and Tower Semiconductor.
Diversification Opportunities for Erste Group and Tower Semiconductor
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Erste and Tower is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Erste Group Bank and Tower Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tower Semiconductor and Erste Group 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 Erste Group Bank 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 Erste Group i.e., Erste Group and Tower Semiconductor go up and down completely randomly.
Pair Corralation between Erste Group and Tower Semiconductor
Assuming the 90 days trading horizon Erste Group Bank is expected to generate 0.65 times more return on investment than Tower Semiconductor. However, Erste Group Bank is 1.53 times less risky than Tower Semiconductor. It trades about 0.1 of its potential returns per unit of risk. Tower Semiconductor is currently generating about 0.03 per unit of risk. If you would invest 2,910 in Erste Group Bank on October 11, 2024 and sell it today you would earn a total of 3,088 from holding Erste Group Bank or generate 106.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.6% |
| Values | Daily Returns |
Erste Group Bank vs. Tower Semiconductor
Performance |
| Timeline |
| Erste Group Bank |
| Tower Semiconductor |
Erste Group and Tower Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erste Group and Tower Semiconductor
The main advantage of trading using opposite Erste Group and Tower Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erste Group 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.| Erste Group vs. CITY OFFICE REIT | Erste Group vs. INVITATION HOMES DL | Erste Group vs. Fortescue Metals Group | Erste Group vs. MAVEN WIRELESS SWEDEN |
| Tower Semiconductor vs. Khiron Life Sciences | Tower Semiconductor vs. De Grey Mining | Tower Semiconductor vs. RELIANCE STEEL AL | Tower Semiconductor vs. Tianjin Capital Environmental |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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