Correlation Between Tower Semiconductor and Klil Industries
Can any of the company-specific risk be diversified away by investing in both Tower Semiconductor and Klil Industries 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 Klil Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tower Semiconductor and Klil Industries, you can compare the effects of market volatilities on Tower Semiconductor and Klil Industries 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 Klil Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tower Semiconductor and Klil Industries.
Diversification Opportunities for Tower Semiconductor and Klil Industries
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Tower and Klil is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Tower Semiconductor and Klil Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Klil Industries 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 Klil Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Klil Industries has no effect on the direction of Tower Semiconductor i.e., Tower Semiconductor and Klil Industries go up and down completely randomly.
Pair Corralation between Tower Semiconductor and Klil Industries
Assuming the 90 days trading horizon Tower Semiconductor is expected to generate 2.66 times less return on investment than Klil Industries. In addition to that, Tower Semiconductor is 1.53 times more volatile than Klil Industries. It trades about 0.08 of its total potential returns per unit of risk. Klil Industries is currently generating about 0.32 per unit of volatility. If you would invest 2,058,000 in Klil Industries on August 30, 2024 and sell it today you would earn a total of 292,000 from holding Klil Industries or generate 14.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tower Semiconductor vs. Klil Industries
Performance |
| Timeline |
| Tower Semiconductor |
| Klil Industries |
Tower Semiconductor and Klil Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tower Semiconductor and Klil Industries
The main advantage of trading using opposite Tower Semiconductor and Klil Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tower Semiconductor position performs unexpectedly, Klil Industries 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 Klil Industries will offset losses from the drop in Klil Industries' long position.| Tower Semiconductor vs. B Communications | Tower Semiconductor vs. Nova | Tower Semiconductor vs. Petrochemical | Tower Semiconductor vs. Israel Opportunity |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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