Correlation Between Tower Semiconductor and CORNISH METALS

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

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

Diversification Opportunities for Tower Semiconductor and CORNISH METALS

0.65

Correlation Coefficient

Tower Semiconductor  CORNISH METALS

Poor diversification

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

Pair Corralation between Tower Semiconductor and CORNISH METALS

Assuming the 90 days horizon Tower Semiconductor is expected to generate 0.78 times more return on investment than CORNISH METALS. However, Tower Semiconductor is 1.29 times less risky than CORNISH METALS. It trades about 0.19 of its potential returns per unit of risk. CORNISH METALS INC is currently generating about 0.08 per unit of risk. If you would invest  3,090  in Tower Semiconductor on April 23, 2025 and sell it today you would earn a total of  1,023  from holding Tower Semiconductor or generate 33.11% return on investment over 90 days.

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

Tower Semiconductor  vs.  CORNISH METALS INC

Tower Semiconductor

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tower Semiconductor are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Tower Semiconductor reported solid returns over the last few months and may actually be approaching a breakup point.

CORNISH METALS INC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CORNISH METALS INC are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, CORNISH METALS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tower Semiconductor and CORNISH METALS

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

The idea behind Tower Semiconductor and CORNISH METALS INC 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.