Correlation Between Tower Semiconductor and Sapiens International

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

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

Diversification Opportunities for Tower Semiconductor and Sapiens International

-0.44

Correlation Coefficient

Tower Semiconductor  Sapiens International

Very good diversification

The 3 months correlation between Tower and Sapiens is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Tower Semiconductor and Sapiens International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sapiens International and Tower 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 Tower Semiconductor are associated (or correlated) with Sapiens International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sapiens International has no effect on the direction of Tower Semiconductor i.e., Tower Semiconductor and Sapiens International go up and down completely randomly.

Pair Corralation between Tower Semiconductor and Sapiens International

Assuming the 90 days trading horizon Tower Semiconductor is expected to under-perform the Sapiens International. In addition to that, Tower Semiconductor is 1.68 times more volatile than Sapiens International. It trades about -0.24 of its total potential returns per unit of risk. Sapiens International is currently generating about 0.06 per unit of volatility. If you would invest  975,000  in Sapiens International on December 30, 2024 and sell it today you would earn a total of  44,000  from holding Sapiens International or generate 4.51% return on investment over 90 days.

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

Tower Semiconductor  vs.  Sapiens International

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. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Sapiens International

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sapiens International are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Sapiens International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Tower Semiconductor and Sapiens International

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

The idea behind Tower Semiconductor and Sapiens International 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.