Correlation Between Asustek Computer and Etron Technology
Can any of the company-specific risk be diversified away by investing in both Asustek Computer and Etron Technology 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 Etron Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asustek Computer and Etron Technology, you can compare the effects of market volatilities on Asustek Computer and Etron Technology 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 Etron Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asustek Computer and Etron Technology.
Diversification Opportunities for Asustek Computer and Etron Technology
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Asustek and Etron is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Asustek Computer and Etron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Etron 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 Etron Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Etron Technology has no effect on the direction of Asustek Computer i.e., Asustek Computer and Etron Technology go up and down completely randomly.
Pair Corralation between Asustek Computer and Etron Technology
Assuming the 90 days trading horizon Asustek Computer is expected to generate 1.73 times less return on investment than Etron Technology. But when comparing it to its historical volatility, Asustek Computer is 1.94 times less risky than Etron Technology. It trades about 0.13 of its potential returns per unit of risk. Etron Technology is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 3,355 in Etron Technology on October 9, 2024 and sell it today you would earn a total of 190.00 from holding Etron Technology or generate 5.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Asustek Computer vs. Etron Technology
Performance |
| Timeline |
| Asustek Computer |
| Etron Technology |
Asustek Computer and Etron Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asustek Computer and Etron Technology
The main advantage of trading using opposite Asustek Computer and Etron Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asustek Computer position performs unexpectedly, Etron Technology 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 Etron Technology will offset losses from the drop in Etron Technology's long position.| Asustek Computer vs. Quanta Computer | Asustek Computer vs. Acer Inc | Asustek Computer vs. United Microelectronics | Asustek Computer vs. Compal Electronics |
| Etron Technology vs. Sunplus Technology Co | Etron Technology vs. Realtek Semiconductor Corp | Etron Technology vs. Winbond Electronics Corp | Etron Technology vs. VIA Technologies |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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