Correlation Between Asustek Computer and Lite On
Can any of the company-specific risk be diversified away by investing in both Asustek Computer and Lite On 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 Asustek Computer and Lite On into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asustek Computer and Lite On Technology Corp, you can compare the effects of market volatilities on Asustek Computer and Lite On 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 Asustek Computer with a short position of Lite On. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asustek Computer and Lite On.
Diversification Opportunities for Asustek Computer and Lite On
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Asustek and Lite is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Asustek Computer and Lite On Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lite On Technology and Asustek Computer 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 Asustek Computer are associated (or correlated) with Lite On. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lite On Technology has no effect on the direction of Asustek Computer i.e., Asustek Computer and Lite On go up and down completely randomly.
Pair Corralation between Asustek Computer and Lite On
Assuming the 90 days trading horizon Asustek Computer is expected to generate 0.69 times more return on investment than Lite On. However, Asustek Computer is 1.46 times less risky than Lite On. It trades about 0.12 of its potential returns per unit of risk. Lite On Technology Corp is currently generating about 0.08 per unit of risk. If you would invest 59,100 in Asustek Computer on August 26, 2024 and sell it today you would earn a total of 2,000 from holding Asustek Computer or generate 3.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Asustek Computer vs. Lite On Technology Corp
Performance |
| Timeline |
| Asustek Computer |
| Lite On Technology |
Asustek Computer and Lite On Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asustek Computer and Lite On
The main advantage of trading using opposite Asustek Computer and Lite On positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asustek Computer position performs unexpectedly, Lite On 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 Lite On will offset losses from the drop in Lite On's long position.| Asustek Computer vs. Quanta Computer | Asustek Computer vs. Acer Inc | Asustek Computer vs. United Microelectronics | Asustek Computer vs. Compal Electronics |
| Lite On vs. Novatek Microelectronics Corp | Lite On vs. Quanta Computer | Lite On vs. United Microelectronics |
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.
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