Correlation Between Tower Semiconductor and Compugen
Can any of the company-specific risk be diversified away by investing in both Tower Semiconductor and Compugen 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 Compugen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tower Semiconductor and Compugen, you can compare the effects of market volatilities on Tower Semiconductor and Compugen 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 Compugen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tower Semiconductor and Compugen.
Diversification Opportunities for Tower Semiconductor and Compugen
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Tower and Compugen is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Tower Semiconductor and Compugen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compugen 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 Compugen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compugen has no effect on the direction of Tower Semiconductor i.e., Tower Semiconductor and Compugen go up and down completely randomly.
Pair Corralation between Tower Semiconductor and Compugen
Assuming the 90 days trading horizon Tower Semiconductor is expected to generate 0.63 times more return on investment than Compugen. However, Tower Semiconductor is 1.58 times less risky than Compugen. It trades about -0.03 of its potential returns per unit of risk. Compugen is currently generating about -0.42 per unit of risk. If you would invest 1,210,000 in Tower Semiconductor on January 20, 2024 and sell it today you would lose (19,000) from holding Tower Semiconductor or give up 1.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tower Semiconductor vs. Compugen
Performance |
| Timeline |
| Tower Semiconductor |
| Compugen |
Tower Semiconductor and Compugen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tower Semiconductor and Compugen
The main advantage of trading using opposite Tower Semiconductor and Compugen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tower Semiconductor position performs unexpectedly, Compugen 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 Compugen will offset losses from the drop in Compugen's long position.| Tower Semiconductor vs. Automatic Bank Services | Tower Semiconductor vs. EN Shoham Business | Tower Semiconductor vs. Rapac Communication Infrastructure | Tower Semiconductor vs. Tadiran Hldg |
| Compugen vs. Purple Biotech | Compugen vs. BioLine RX | Compugen vs. Clal Biotechnology Industries | Compugen vs. Evogene |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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