Correlation Between Himax Technologies and Tower Semiconductor
Can any of the company-specific risk be diversified away by investing in both Himax Technologies 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 Himax Technologies and Tower Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Himax Technologies and Tower Semiconductor, you can compare the effects of market volatilities on Himax Technologies 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 Himax Technologies with a short position of Tower Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Himax Technologies and Tower Semiconductor.
Diversification Opportunities for Himax Technologies and Tower Semiconductor
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Himax and Tower is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Himax Technologies and Tower Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tower Semiconductor and Himax Technologies 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 Himax Technologies 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 Himax Technologies i.e., Himax Technologies and Tower Semiconductor go up and down completely randomly.
Pair Corralation between Himax Technologies and Tower Semiconductor
Given the investment horizon of 90 days Himax Technologies is expected to under-perform the Tower Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, Himax Technologies is 1.27 times less risky than Tower Semiconductor. The stock trades about -0.01 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 4,134 in Tower Semiconductor on September 3, 2024 and sell it today you would earn a total of 579.00 from holding Tower Semiconductor or generate 14.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Himax Technologies vs. Tower Semiconductor
Performance |
| Timeline |
| Himax Technologies |
| Tower Semiconductor |
Himax Technologies and Tower Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Himax Technologies and Tower Semiconductor
The main advantage of trading using opposite Himax Technologies and Tower Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Himax Technologies 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.| Himax Technologies vs. Silicon Motion Technology | Himax Technologies vs. ASE Industrial Holding | Himax Technologies vs. SemiLEDS | Himax Technologies vs. Advanced Micro Devices |
| Tower Semiconductor vs. Silicon Motion Technology | Tower Semiconductor vs. ASE Industrial Holding | Tower Semiconductor vs. SemiLEDS | 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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