Correlation Between TOREX SEMICONDUCTOR and RWE AG

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

Diversification Opportunities for TOREX SEMICONDUCTOR and RWE AG

0.0

Correlation Coefficient

TOREX SEMICONDUCTOR  RWE AG

Pay attention - limited upside

The 3 months correlation between TOREX and RWE is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding TOREX SEMICONDUCTOR LTD and RWE AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RWE AG 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 RWE AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RWE AG has no effect on the direction of TOREX SEMICONDUCTOR i.e., TOREX SEMICONDUCTOR and RWE AG go up and down completely randomly.

Pair Corralation between TOREX SEMICONDUCTOR and RWE AG

If you would invest  675.00  in TOREX SEMICONDUCTOR LTD on December 20, 2024 and sell it today you would earn a total of  95.00  from holding TOREX SEMICONDUCTOR LTD or generate 14.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.69%
Values	Daily Returns

TOREX SEMICONDUCTOR LTD  vs.  RWE AG

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.

RWE AG

Risk-Adjusted Performance

Solid

Over the last 90 days RWE AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, RWE AG is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with TOREX SEMICONDUCTOR and RWE AG

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

The idea behind TOREX SEMICONDUCTOR LTD and RWE AG 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.