Correlation Between Tower Semiconductor and Lion One
Can any of the company-specific risk be diversified away by investing in both Tower Semiconductor and Lion One 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 Lion One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tower Semiconductor and Lion One Metals, you can compare the effects of market volatilities on Tower Semiconductor and Lion One 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 Lion One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tower Semiconductor and Lion One.
Diversification Opportunities for Tower Semiconductor and Lion One
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Tower and Lion is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Tower Semiconductor and Lion One Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion One Metals 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 Lion One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion One Metals has no effect on the direction of Tower Semiconductor i.e., Tower Semiconductor and Lion One go up and down completely randomly.
Pair Corralation between Tower Semiconductor and Lion One
Assuming the 90 days horizon Tower Semiconductor is expected to generate 0.63 times more return on investment than Lion One. However, Tower Semiconductor is 1.59 times less risky than Lion One. It trades about 0.08 of its potential returns per unit of risk. Lion One Metals is currently generating about -0.06 per unit of risk. If you would invest 3,440 in Tower Semiconductor on August 31, 2024 and sell it today you would earn a total of 986.00 from holding Tower Semiconductor or generate 28.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tower Semiconductor vs. Lion One Metals
Performance |
| Timeline |
| Tower Semiconductor |
| Lion One Metals |
Tower Semiconductor and Lion One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tower Semiconductor and Lion One
The main advantage of trading using opposite Tower Semiconductor and Lion One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tower Semiconductor position performs unexpectedly, Lion One 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 Lion One will offset losses from the drop in Lion One's long position.| Tower Semiconductor vs. Addus HomeCare | Tower Semiconductor vs. Strategic Investments AS | Tower Semiconductor vs. MAVEN WIRELESS SWEDEN | Tower Semiconductor vs. MTI WIRELESS EDGE |
| Lion One vs. ZIJIN MINH UNSPADR20 | Lion One vs. Superior Plus Corp | Lion One vs. NMI Holdings | Lion One vs. Origin Agritech |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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