Correlation Between TOREX SEMICONDUCTOR and BRAEMAR HOTELS

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

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

Diversification Opportunities for TOREX SEMICONDUCTOR and BRAEMAR HOTELS

-0.7

Correlation Coefficient

TOREX SEMICONDUCTOR  BRAEMAR HOTELS

Excellent diversification

The 3 months correlation between TOREX and BRAEMAR is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding TOREX SEMICONDUCTOR LTD and BRAEMAR HOTELS RES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRAEMAR HOTELS RES and TOREX 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 TOREX SEMICONDUCTOR LTD are associated (or correlated) with BRAEMAR HOTELS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRAEMAR HOTELS RES has no effect on the direction of TOREX SEMICONDUCTOR i.e., TOREX SEMICONDUCTOR and BRAEMAR HOTELS go up and down completely randomly.

Pair Corralation between TOREX SEMICONDUCTOR and BRAEMAR HOTELS

Assuming the 90 days horizon TOREX SEMICONDUCTOR LTD is expected to under-perform the BRAEMAR HOTELS. But the stock apears to be less risky and, when comparing its historical volatility, TOREX SEMICONDUCTOR LTD is 2.13 times less risky than BRAEMAR HOTELS. The stock trades about -0.21 of its potential returns per unit of risk. The BRAEMAR HOTELS RES is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  267.00  in BRAEMAR HOTELS RES on October 12, 2024 and sell it today you would earn a total of  13.00  from holding BRAEMAR HOTELS RES or generate 4.87% return on investment over 90 days.

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

TOREX SEMICONDUCTOR LTD  vs.  BRAEMAR HOTELS RES

TOREX SEMICONDUCTOR LTD

Risk-Adjusted Performance

0 of 100

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 fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

BRAEMAR HOTELS RES

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BRAEMAR HOTELS RES are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, BRAEMAR HOTELS may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with TOREX SEMICONDUCTOR and BRAEMAR HOTELS

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

The idea behind TOREX SEMICONDUCTOR LTD and BRAEMAR HOTELS RES 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.