Correlation Between New Residential and TOREX SEMICONDUCTOR

Can any of the company-specific risk be diversified away by investing in both New Residential and TOREX 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 New Residential and TOREX SEMICONDUCTOR into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between New Residential Investment and TOREX SEMICONDUCTOR LTD, you can compare the effects of market volatilities on New Residential and TOREX 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 New Residential with a short position of TOREX SEMICONDUCTOR. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and TOREX SEMICONDUCTOR.

Diversification Opportunities for New Residential and TOREX SEMICONDUCTOR

0.14

Correlation Coefficient

New Residential  TOREX SEMICONDUCTOR

Average diversification

The 3 months correlation between New and TOREX is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and TOREX SEMICONDUCTOR LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOREX SEMICONDUCTOR LTD and New Residential 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 New Residential Investment are associated (or correlated) with TOREX SEMICONDUCTOR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOREX SEMICONDUCTOR LTD has no effect on the direction of New Residential i.e., New Residential and TOREX SEMICONDUCTOR go up and down completely randomly.

Pair Corralation between New Residential and TOREX SEMICONDUCTOR

Assuming the 90 days trading horizon New Residential Investment is expected to generate 0.49 times more return on investment than TOREX SEMICONDUCTOR. However, New Residential Investment is 2.06 times less risky than TOREX SEMICONDUCTOR. It trades about 0.11 of its potential returns per unit of risk. TOREX SEMICONDUCTOR LTD is currently generating about -0.05 per unit of risk. If you would invest  599.00  in New Residential Investment on December 2, 2024 and sell it today you would earn a total of  565.00  from holding New Residential Investment or generate 94.32% return on investment over 90 days.

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

New Residential Investment  vs.  TOREX SEMICONDUCTOR LTD

New Residential Inve

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in New Residential Investment are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, New Residential may actually be approaching a critical reversion point that can send shares even higher in April 2025.

TOREX SEMICONDUCTOR LTD

Risk-Adjusted Performance

Very Weak

Over the last 90 days TOREX SEMICONDUCTOR LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, TOREX SEMICONDUCTOR is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with New Residential and TOREX SEMICONDUCTOR

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

The idea behind New Residential Investment and TOREX SEMICONDUCTOR LTD 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.