Correlation Between Tower Semiconductor and Upsellon Brands

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Can any of the company-specific risk be diversified away by investing in both Tower Semiconductor and Upsellon Brands 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 Upsellon Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tower Semiconductor and Upsellon Brands Holdings, you can compare the effects of market volatilities on Tower Semiconductor and Upsellon Brands 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 Upsellon Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tower Semiconductor and Upsellon Brands.

Diversification Opportunities for Tower Semiconductor and Upsellon Brands

-0.12
  Correlation Coefficient

Good diversification

The 3 months correlation between Tower and Upsellon is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Tower Semiconductor and Upsellon Brands Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Upsellon Brands Holdings 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 Upsellon Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Upsellon Brands Holdings has no effect on the direction of Tower Semiconductor i.e., Tower Semiconductor and Upsellon Brands go up and down completely randomly.

Pair Corralation between Tower Semiconductor and Upsellon Brands

Assuming the 90 days trading horizon Tower Semiconductor is expected to under-perform the Upsellon Brands. But the stock apears to be less risky and, when comparing its historical volatility, Tower Semiconductor is 11.48 times less risky than Upsellon Brands. The stock trades about -0.03 of its potential returns per unit of risk. The Upsellon Brands Holdings is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  15,340  in Upsellon Brands Holdings on December 30, 2023 and sell it today you would lose (4,640) from holding Upsellon Brands Holdings or give up 30.25% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy99.74%
ValuesDaily Returns

Tower Semiconductor  vs.  Upsellon Brands Holdings

 Performance 
       Timeline  
Tower Semiconductor 

Risk-Adjusted Performance

6 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Tower Semiconductor are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Tower Semiconductor may actually be approaching a critical reversion point that can send shares even higher in April 2024.
Upsellon Brands Holdings 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Upsellon Brands Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Upsellon Brands is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Tower Semiconductor and Upsellon Brands Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Tower Semiconductor and Upsellon Brands

The main advantage of trading using opposite Tower Semiconductor and Upsellon Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tower Semiconductor position performs unexpectedly, Upsellon Brands 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 Upsellon Brands will offset losses from the drop in Upsellon Brands' long position.
The idea behind Tower Semiconductor and Upsellon Brands Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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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