Correlation Between TOREX SEMICONDUCTOR and ETFS Coffee

Can any of the company-specific risk be diversified away by investing in both TOREX SEMICONDUCTOR and ETFS Coffee 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 ETFS Coffee 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 ETFS Coffee ETC, you can compare the effects of market volatilities on TOREX SEMICONDUCTOR and ETFS Coffee 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 ETFS Coffee. Check out your portfolio center. Please also check ongoing floating volatility patterns of TOREX SEMICONDUCTOR and ETFS Coffee.

Diversification Opportunities for TOREX SEMICONDUCTOR and ETFS Coffee

0.61

Correlation Coefficient

TOREX SEMICONDUCTOR  ETFS Coffee

Poor diversification

The 3 months correlation between TOREX and ETFS is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding TOREX SEMICONDUCTOR LTD and ETFS Coffee ETC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETFS Coffee ETC 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 ETFS Coffee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETFS Coffee ETC has no effect on the direction of TOREX SEMICONDUCTOR i.e., TOREX SEMICONDUCTOR and ETFS Coffee go up and down completely randomly.

Pair Corralation between TOREX SEMICONDUCTOR and ETFS Coffee

Assuming the 90 days horizon TOREX SEMICONDUCTOR is expected to generate 1.1 times less return on investment than ETFS Coffee. In addition to that, TOREX SEMICONDUCTOR is 1.04 times more volatile than ETFS Coffee ETC. It trades about 0.09 of its total potential returns per unit of risk. ETFS Coffee ETC is currently generating about 0.11 per unit of volatility. If you would invest  5,384  in ETFS Coffee ETC on December 19, 2024 and sell it today you would earn a total of  867.00  from holding ETFS Coffee ETC or generate 16.1% return on investment over 90 days.

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

TOREX SEMICONDUCTOR LTD  vs.  ETFS Coffee ETC

TOREX SEMICONDUCTOR LTD

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TOREX SEMICONDUCTOR LTD are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, TOREX SEMICONDUCTOR reported solid returns over the last few months and may actually be approaching a breakup point.

ETFS Coffee ETC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ETFS Coffee ETC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ETFS Coffee reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TOREX SEMICONDUCTOR and ETFS Coffee

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

The idea behind TOREX SEMICONDUCTOR LTD and ETFS Coffee ETC 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.