Correlation Between Tower Semiconductor and AudioCodes
Can any of the company-specific risk be diversified away by investing in both Tower Semiconductor and AudioCodes 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 AudioCodes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tower Semiconductor and AudioCodes, you can compare the effects of market volatilities on Tower Semiconductor and AudioCodes 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 AudioCodes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tower Semiconductor and AudioCodes.
Diversification Opportunities for Tower Semiconductor and AudioCodes
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Tower and AudioCodes is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Tower Semiconductor and AudioCodes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AudioCodes 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 AudioCodes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AudioCodes has no effect on the direction of Tower Semiconductor i.e., Tower Semiconductor and AudioCodes go up and down completely randomly.
Pair Corralation between Tower Semiconductor and AudioCodes
Given the investment horizon of 90 days Tower Semiconductor is expected to generate 1.02 times more return on investment than AudioCodes. However, Tower Semiconductor is 1.02 times more volatile than AudioCodes. It trades about 0.08 of its potential returns per unit of risk. AudioCodes is currently generating about -0.04 per unit of risk. If you would invest 4,486 in Tower Semiconductor on August 30, 2024 and sell it today you would earn a total of 250.00 from holding Tower Semiconductor or generate 5.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tower Semiconductor vs. AudioCodes
Performance |
| Timeline |
| Tower Semiconductor |
| AudioCodes |
Tower Semiconductor and AudioCodes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tower Semiconductor and AudioCodes
The main advantage of trading using opposite Tower Semiconductor and AudioCodes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tower Semiconductor position performs unexpectedly, AudioCodes 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 AudioCodes will offset losses from the drop in AudioCodes' long position.| Tower Semiconductor vs. Nova | Tower Semiconductor vs. AudioCodes | Tower Semiconductor vs. Nice Ltd ADR | Tower Semiconductor vs. Elbit Systems |
| AudioCodes vs. Aviat Networks | AudioCodes vs. Silicom | AudioCodes vs. Akoustis Technologies | AudioCodes vs. Gilat Satellite Networks |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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