Correlation Between Tower Semiconductor and Automatic Bank

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

By analyzing existing cross correlation between Tower Semiconductor and Automatic Bank Services, you can compare the effects of market volatilities on Tower Semiconductor and Automatic Bank 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 Automatic Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tower Semiconductor and Automatic Bank.

Diversification Opportunities for Tower Semiconductor and Automatic Bank

-0.48

Correlation Coefficient

Tower Semiconductor  Automatic Bank

Very good diversification

The 3 months correlation between Tower and Automatic is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Tower Semiconductor and Automatic Bank Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automatic Bank Services 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 Automatic Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automatic Bank Services has no effect on the direction of Tower Semiconductor i.e., Tower Semiconductor and Automatic Bank go up and down completely randomly.

Pair Corralation between Tower Semiconductor and Automatic Bank

Assuming the 90 days trading horizon Tower Semiconductor is expected to under-perform the Automatic Bank. In addition to that, Tower Semiconductor is 1.17 times more volatile than Automatic Bank Services. It trades about -0.03 of its total potential returns per unit of risk. Automatic Bank Services is currently generating about 0.0 per unit of volatility. If you would invest  140,973  in Automatic Bank Services on February 1, 2024 and sell it today you would lose (473.00) from holding Automatic Bank Services or give up 0.34% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Tower Semiconductor  vs.  Automatic Bank Services

Tower Semiconductor

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tower Semiconductor are ranked lower than 11 (%) 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.

Automatic Bank Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Automatic Bank Services has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Tower Semiconductor and Automatic Bank

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

The idea behind Tower Semiconductor and Automatic Bank Services 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.

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 CEOs Directory module to screen CEOs from public companies around the world.