Correlation Between EVN AG and Tower Semiconductor

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

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

Diversification Opportunities for EVN AG and Tower Semiconductor

-0.83

Correlation Coefficient

EVN AG  Tower Semiconductor

Pay attention - limited upside

The 3 months correlation between EVN and Tower is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding EVN AG and Tower Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tower Semiconductor and EVN AG 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 EVN AG 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 EVN AG i.e., EVN AG and Tower Semiconductor go up and down completely randomly.

Pair Corralation between EVN AG and Tower Semiconductor

Assuming the 90 days horizon EVN AG is expected to under-perform the Tower Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, EVN AG is 1.94 times less risky than Tower Semiconductor. The stock trades about -0.06 of its potential returns per unit of risk. The Tower Semiconductor is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,448  in Tower Semiconductor on September 23, 2024 and sell it today you would earn a total of  2,348  from holding Tower Semiconductor or generate 95.92% return on investment over 90 days.

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

EVN AG  vs.  Tower Semiconductor

EVN AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EVN AG 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.

Tower Semiconductor

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tower Semiconductor are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Tower Semiconductor reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EVN AG and Tower Semiconductor

The main advantage of trading using opposite EVN AG and Tower Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EVN AG 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 EVN AG 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.