Correlation Between Tower Semiconductor and CapitaLand Investment
Can any of the company-specific risk be diversified away by investing in both Tower Semiconductor and CapitaLand Investment 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 CapitaLand Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tower Semiconductor and CapitaLand Investment Limited, you can compare the effects of market volatilities on Tower Semiconductor and CapitaLand Investment 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 CapitaLand Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tower Semiconductor and CapitaLand Investment.
Diversification Opportunities for Tower Semiconductor and CapitaLand Investment
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Tower and CapitaLand is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Tower Semiconductor and CapitaLand Investment Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CapitaLand Investment 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 CapitaLand Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CapitaLand Investment has no effect on the direction of Tower Semiconductor i.e., Tower Semiconductor and CapitaLand Investment go up and down completely randomly.
Pair Corralation between Tower Semiconductor and CapitaLand Investment
Given the investment horizon of 90 days Tower Semiconductor is expected to generate 2.06 times more return on investment than CapitaLand Investment. However, Tower Semiconductor is 2.06 times more volatile than CapitaLand Investment Limited. It trades about 0.08 of its potential returns per unit of risk. CapitaLand Investment Limited is currently generating about -0.21 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 | 95.65% |
| Values | Daily Returns |
Tower Semiconductor vs. CapitaLand Investment Limited
Performance |
| Timeline |
| Tower Semiconductor |
| CapitaLand Investment |
Tower Semiconductor and CapitaLand Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tower Semiconductor and CapitaLand Investment
The main advantage of trading using opposite Tower Semiconductor and CapitaLand Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tower Semiconductor position performs unexpectedly, CapitaLand Investment 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 CapitaLand Investment will offset losses from the drop in CapitaLand Investment's long position.| Tower Semiconductor vs. Nova | Tower Semiconductor vs. AudioCodes | Tower Semiconductor vs. Nice Ltd ADR | Tower Semiconductor vs. Elbit Systems |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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