Correlation Between Biomedix Incubator and Tower Semiconductor

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

By analyzing existing cross correlation between Biomedix Incubator and Tower Semiconductor, you can compare the effects of market volatilities on Biomedix Incubator and Tower 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 Biomedix Incubator with a short position of Tower Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biomedix Incubator and Tower Semiconductor.

Diversification Opportunities for Biomedix Incubator and Tower Semiconductor

0.68

Correlation Coefficient

Biomedix Incubator  Tower Semiconductor

Poor diversification

The 3 months correlation between Biomedix and Tower is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Biomedix Incubator and Tower Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tower Semiconductor and Biomedix Incubator 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 Biomedix Incubator are associated (or correlated) with Tower Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tower Semiconductor has no effect on the direction of Biomedix Incubator i.e., Biomedix Incubator and Tower Semiconductor go up and down completely randomly.

Pair Corralation between Biomedix Incubator and Tower Semiconductor

Assuming the 90 days trading horizon Biomedix Incubator is expected to generate 2.62 times more return on investment than Tower Semiconductor. However, Biomedix Incubator is 2.62 times more volatile than Tower Semiconductor. It trades about 0.18 of its potential returns per unit of risk. Tower Semiconductor is currently generating about -0.06 per unit of risk. If you would invest  1,603,000  in Biomedix Incubator on February 6, 2024 and sell it today you would earn a total of  192,000  from holding Biomedix Incubator or generate 11.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Biomedix Incubator  vs.  Tower Semiconductor

Biomedix Incubator

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Biomedix Incubator are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Biomedix Incubator sustained solid returns over the last few months and may actually be approaching a breakup point.

Tower Semiconductor

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tower Semiconductor are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Tower Semiconductor sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Biomedix Incubator and Tower Semiconductor

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

The idea behind Biomedix Incubator and Tower Semiconductor 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.