Correlation Between Tower Semiconductor and Amkor Technology
Can any of the company-specific risk be diversified away by investing in both Tower Semiconductor and Amkor Technology 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 Tower Semiconductor and Amkor Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tower Semiconductor and Amkor Technology, you can compare the effects of market volatilities on Tower Semiconductor and Amkor Technology 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 Tower Semiconductor with a short position of Amkor Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tower Semiconductor and Amkor Technology.
Diversification Opportunities for Tower Semiconductor and Amkor Technology
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Tower and Amkor is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Tower Semiconductor and Amkor Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amkor Technology and Tower Semiconductor 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 Tower Semiconductor are associated (or correlated) with Amkor Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amkor Technology has no effect on the direction of Tower Semiconductor i.e., Tower Semiconductor and Amkor Technology go up and down completely randomly.
Pair Corralation between Tower Semiconductor and Amkor Technology
Assuming the 90 days horizon Tower Semiconductor is expected to generate 1.0 times more return on investment than Amkor Technology. However, Tower Semiconductor is 1.0 times less risky than Amkor Technology. It trades about 0.17 of its potential returns per unit of risk. Amkor Technology is currently generating about -0.1 per unit of risk. If you would invest 4,504 in Tower Semiconductor on September 24, 2024 and sell it today you would earn a total of 292.00 from holding Tower Semiconductor or generate 6.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tower Semiconductor vs. Amkor Technology
Performance |
| Timeline |
| Tower Semiconductor |
| Amkor Technology |
Tower Semiconductor and Amkor Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tower Semiconductor and Amkor Technology
The main advantage of trading using opposite Tower Semiconductor and Amkor Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tower Semiconductor position performs unexpectedly, Amkor Technology 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 Amkor Technology will offset losses from the drop in Amkor Technology's long position.| Tower Semiconductor vs. CHINA EDUCATION GROUP | Tower Semiconductor vs. American Public Education | Tower Semiconductor vs. STORE ELECTRONIC | Tower Semiconductor vs. Adtalem Global Education |
| Amkor Technology vs. NVIDIA | Amkor Technology vs. Taiwan Semiconductor Manufacturing | Amkor Technology vs. Broadcom | Amkor Technology vs. Texas Instruments Incorporated |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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