Correlation Between TOREX SEMICONDUCTOR and WOODSIDE ENE

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

Diversification Opportunities for TOREX SEMICONDUCTOR and WOODSIDE ENE

0.58

Correlation Coefficient

TOREX SEMICONDUCTOR  WOODSIDE ENE

Very weak diversification

The 3 months correlation between TOREX and WOODSIDE is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding TOREX SEMICONDUCTOR LTD and WOODSIDE ENE SPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WOODSIDE ENE SPADR 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 WOODSIDE ENE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WOODSIDE ENE SPADR has no effect on the direction of TOREX SEMICONDUCTOR i.e., TOREX SEMICONDUCTOR and WOODSIDE ENE go up and down completely randomly.

Pair Corralation between TOREX SEMICONDUCTOR and WOODSIDE ENE

Assuming the 90 days horizon TOREX SEMICONDUCTOR LTD is expected to under-perform the WOODSIDE ENE. In addition to that, TOREX SEMICONDUCTOR is 1.1 times more volatile than WOODSIDE ENE SPADR. It trades about -0.07 of its total potential returns per unit of risk. WOODSIDE ENE SPADR is currently generating about -0.01 per unit of volatility. If you would invest  1,856  in WOODSIDE ENE SPADR on September 24, 2024 and sell it today you would lose (406.00) from holding WOODSIDE ENE SPADR or give up 21.87% of portfolio value over 90 days.

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

TOREX SEMICONDUCTOR LTD  vs.  WOODSIDE ENE SPADR

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 January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

WOODSIDE ENE SPADR

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with TOREX SEMICONDUCTOR and WOODSIDE ENE

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

The idea behind TOREX SEMICONDUCTOR LTD and WOODSIDE ENE SPADR 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.