Correlation Between Carbon Revolution and Tower Semiconductor

Can any of the company-specific risk be diversified away by investing in both Carbon Revolution and Tower 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 Carbon Revolution and Tower Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Carbon Revolution Public and Tower Semiconductor, you can compare the effects of market volatilities on Carbon Revolution and Tower 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 Carbon Revolution with a short position of Tower Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carbon Revolution and Tower Semiconductor.

Diversification Opportunities for Carbon Revolution and Tower Semiconductor

0.36

Correlation Coefficient

Carbon Revolution  Tower Semiconductor

Weak diversification

The 3 months correlation between Carbon and Tower is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Carbon Revolution Public and Tower Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tower Semiconductor and Carbon Revolution 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 Carbon Revolution Public are associated (or correlated) with Tower Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tower Semiconductor has no effect on the direction of Carbon Revolution i.e., Carbon Revolution and Tower Semiconductor go up and down completely randomly.

Pair Corralation between Carbon Revolution and Tower Semiconductor

Assuming the 90 days horizon Carbon Revolution Public is expected to generate 7.27 times more return on investment than Tower Semiconductor. However, Carbon Revolution is 7.27 times more volatile than Tower Semiconductor. It trades about 0.12 of its potential returns per unit of risk. Tower Semiconductor is currently generating about -0.13 per unit of risk. If you would invest  2.77  in Carbon Revolution Public on December 19, 2024 and sell it today you would earn a total of  1.67  from holding Carbon Revolution Public or generate 60.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.61%
Values	Daily Returns

Carbon Revolution Public  vs.  Tower Semiconductor

Carbon Revolution Public

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Carbon Revolution Public are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Carbon Revolution showed solid returns over the last few months and may actually be approaching a breakup point.

Tower Semiconductor

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tower Semiconductor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Carbon Revolution and Tower Semiconductor

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

The idea behind Carbon Revolution Public and Tower Semiconductor 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.

Check out your portfolio center.

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.