Correlation Between Comtech Telecommunicatio and Taiwan Semiconductor

Can any of the company-specific risk be diversified away by investing in both Comtech Telecommunicatio and Taiwan Semiconductor 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 Comtech Telecommunicatio and Taiwan Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Comtech Telecommunications Corp and Taiwan Semiconductor Manufacturing, you can compare the effects of market volatilities on Comtech Telecommunicatio and Taiwan Semiconductor 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 Comtech Telecommunicatio with a short position of Taiwan Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Comtech Telecommunicatio and Taiwan Semiconductor.

Diversification Opportunities for Comtech Telecommunicatio and Taiwan Semiconductor

0.65

Correlation Coefficient

Comtech Telecommunicatio  Taiwan Semiconductor

Poor diversification

The 3 months correlation between Comtech and Taiwan is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Comtech Telecommunications Cor and Taiwan Semiconductor Manufactu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Semiconductor and Comtech Telecommunicatio 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 Comtech Telecommunications Corp are associated (or correlated) with Taiwan Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Semiconductor has no effect on the direction of Comtech Telecommunicatio i.e., Comtech Telecommunicatio and Taiwan Semiconductor go up and down completely randomly.

Pair Corralation between Comtech Telecommunicatio and Taiwan Semiconductor

Given the investment horizon of 90 days Comtech Telecommunications Corp is expected to generate 2.84 times more return on investment than Taiwan Semiconductor. However, Comtech Telecommunicatio is 2.84 times more volatile than Taiwan Semiconductor Manufacturing. It trades about 0.03 of its potential returns per unit of risk. Taiwan Semiconductor Manufacturing is currently generating about 0.07 per unit of risk. If you would invest  353.00  in Comtech Telecommunications Corp on September 6, 2025 and sell it today you would lose (28.00) from holding Comtech Telecommunications Corp or give up 7.93% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Comtech Telecommunications Cor  vs.  Taiwan Semiconductor Manufactu

Comtech Telecommunicatio

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Comtech Telecommunications Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, Comtech Telecommunicatio disclosed solid returns over the last few months and may actually be approaching a breakup point.

Taiwan Semiconductor

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Taiwan Semiconductor Manufacturing are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Taiwan Semiconductor is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Comtech Telecommunicatio and Taiwan Semiconductor

The main advantage of trading using opposite Comtech Telecommunicatio and Taiwan Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Comtech Telecommunicatio position performs unexpectedly, Taiwan Semiconductor 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 Taiwan Semiconductor will offset losses from the drop in Taiwan Semiconductor's long position.

The idea behind Comtech Telecommunications Corp and Taiwan Semiconductor Manufacturing 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.