Correlation Between Tower Semiconductor and CSSC Offshore

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

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

Diversification Opportunities for Tower Semiconductor and CSSC Offshore

0.53

Correlation Coefficient

Tower Semiconductor  CSSC Offshore

Very weak diversification

The 3 months correlation between Tower and CSSC is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Tower Semiconductor and CSSC Offshore Marine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSSC Offshore Marine 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 CSSC Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSSC Offshore Marine has no effect on the direction of Tower Semiconductor i.e., Tower Semiconductor and CSSC Offshore go up and down completely randomly.

Pair Corralation between Tower Semiconductor and CSSC Offshore

Assuming the 90 days horizon Tower Semiconductor is expected to generate 24.71 times more return on investment than CSSC Offshore. However, Tower Semiconductor is 24.71 times more volatile than CSSC Offshore Marine. It trades about 0.21 of its potential returns per unit of risk. CSSC Offshore Marine is currently generating about 0.13 per unit of risk. If you would invest  3,017  in Tower Semiconductor on April 21, 2025 and sell it today you would earn a total of  1,138  from holding Tower Semiconductor or generate 37.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Tower Semiconductor  vs.  CSSC Offshore Marine

Tower Semiconductor

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tower Semiconductor are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Tower Semiconductor reported solid returns over the last few months and may actually be approaching a breakup point.

CSSC Offshore Marine

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CSSC Offshore Marine are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, CSSC Offshore is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Tower Semiconductor and CSSC Offshore

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

The idea behind Tower Semiconductor and CSSC Offshore Marine 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.