Correlation Between Taiwan Semiconductor and Payoneer Global

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

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

Diversification Opportunities for Taiwan Semiconductor and Payoneer Global

0.49

Correlation Coefficient

Taiwan Semiconductor  Payoneer Global

Very weak diversification

The 3 months correlation between Taiwan and Payoneer is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Semiconductor Manufactu and Payoneer Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payoneer Global and Taiwan 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 Taiwan Semiconductor Manufacturing are associated (or correlated) with Payoneer Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payoneer Global has no effect on the direction of Taiwan Semiconductor i.e., Taiwan Semiconductor and Payoneer Global go up and down completely randomly.

Pair Corralation between Taiwan Semiconductor and Payoneer Global

Considering the 90-day investment horizon Taiwan Semiconductor Manufacturing is expected to generate 1.07 times more return on investment than Payoneer Global. However, Taiwan Semiconductor is 1.07 times more volatile than Payoneer Global. It trades about 0.14 of its potential returns per unit of risk. Payoneer Global is currently generating about -0.15 per unit of risk. If you would invest  18,907  in Taiwan Semiconductor Manufacturing on September 20, 2024 and sell it today you would earn a total of  1,159  from holding Taiwan Semiconductor Manufacturing or generate 6.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Taiwan Semiconductor Manufactu  vs.  Payoneer Global

Taiwan Semiconductor

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Taiwan Semiconductor Manufacturing are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Taiwan Semiconductor displayed solid returns over the last few months and may actually be approaching a breakup point.

Payoneer Global

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Payoneer Global are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Payoneer Global displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Taiwan Semiconductor and Payoneer Global

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

The idea behind Taiwan Semiconductor Manufacturing and Payoneer Global 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.