Correlation Between Nextcom and Tower Semiconductor
Can any of the company-specific risk be diversified away by investing in both Nextcom 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 Nextcom and Tower Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nextcom and Tower Semiconductor, you can compare the effects of market volatilities on Nextcom 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 Nextcom with a short position of Tower Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nextcom and Tower Semiconductor.
Diversification Opportunities for Nextcom and Tower Semiconductor
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nextcom and Tower is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Nextcom and Tower Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tower Semiconductor and Nextcom 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 Nextcom 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 Nextcom i.e., Nextcom and Tower Semiconductor go up and down completely randomly.
Pair Corralation between Nextcom and Tower Semiconductor
Assuming the 90 days trading horizon Nextcom is expected to generate 1.46 times more return on investment than Tower Semiconductor. However, Nextcom is 1.46 times more volatile than Tower Semiconductor. It trades about 0.12 of its potential returns per unit of risk. Tower Semiconductor is currently generating about 0.04 per unit of risk. If you would invest 63,010 in Nextcom on September 15, 2024 and sell it today you would earn a total of 3,480 from holding Nextcom or generate 5.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nextcom vs. Tower Semiconductor
Performance |
| Timeline |
| Nextcom |
| Tower Semiconductor |
Nextcom and Tower Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nextcom and Tower Semiconductor
The main advantage of trading using opposite Nextcom and Tower Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nextcom 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.| Nextcom vs. Tower Semiconductor | Nextcom vs. Israel Discount Bank | Nextcom vs. B Communications | Nextcom vs. Photomyne |
| Tower Semiconductor vs. Teva Pharmaceutical Industries | Tower Semiconductor vs. Elbit Systems | Tower Semiconductor vs. Bezeq Israeli Telecommunication | Tower Semiconductor vs. ICL Israel Chemicals |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas |