Correlation Between ASRock and Micro Star
Can any of the company-specific risk be diversified away by investing in both ASRock and Micro Star 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 ASRock and Micro Star into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ASRock Inc and Micro Star International Co, you can compare the effects of market volatilities on ASRock and Micro Star 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 ASRock with a short position of Micro Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASRock and Micro Star.
Diversification Opportunities for ASRock and Micro Star
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between ASRock and Micro is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding ASRock Inc and Micro Star International Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micro Star Internati and ASRock 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 ASRock Inc are associated (or correlated) with Micro Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Micro Star Internati has no effect on the direction of ASRock i.e., ASRock and Micro Star go up and down completely randomly.
Pair Corralation between ASRock and Micro Star
Assuming the 90 days trading horizon ASRock Inc is expected to generate 1.9 times more return on investment than Micro Star. However, ASRock is 1.9 times more volatile than Micro Star International Co. It trades about 0.2 of its potential returns per unit of risk. Micro Star International Co is currently generating about -0.14 per unit of risk. If you would invest 20,350 in ASRock Inc on August 31, 2024 and sell it today you would earn a total of 2,900 from holding ASRock Inc or generate 14.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ASRock Inc vs. Micro Star International Co
Performance |
| Timeline |
| ASRock Inc |
| Micro Star Internati |
ASRock and Micro Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASRock and Micro Star
The main advantage of trading using opposite ASRock and Micro Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASRock position performs unexpectedly, Micro Star 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 Micro Star will offset losses from the drop in Micro Star's long position.| ASRock vs. Gigabyte Technology Co | ASRock vs. Micro Star International Co | ASRock vs. Asustek Computer | ASRock vs. Kinsus Interconnect Technology |
| Micro Star vs. United Microelectronics | Micro Star vs. Winbond Electronics Corp | Micro Star vs. Macronix International Co |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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