Correlation Between ASE Industrial and Chia Ta
Can any of the company-specific risk be diversified away by investing in both ASE Industrial and Chia Ta 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 ASE Industrial and Chia Ta into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ASE Industrial Holding and Chia Ta World, you can compare the effects of market volatilities on ASE Industrial and Chia Ta 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 ASE Industrial with a short position of Chia Ta. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASE Industrial and Chia Ta.
Diversification Opportunities for ASE Industrial and Chia Ta
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ASE and Chia is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding ASE Industrial Holding and Chia Ta World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chia Ta World and ASE Industrial 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 ASE Industrial Holding are associated (or correlated) with Chia Ta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chia Ta World has no effect on the direction of ASE Industrial i.e., ASE Industrial and Chia Ta go up and down completely randomly.
Pair Corralation between ASE Industrial and Chia Ta
Assuming the 90 days trading horizon ASE Industrial Holding is expected to generate 0.62 times more return on investment than Chia Ta. However, ASE Industrial Holding is 1.61 times less risky than Chia Ta. It trades about -0.16 of its potential returns per unit of risk. Chia Ta World is currently generating about -0.14 per unit of risk. If you would invest 15,700 in ASE Industrial Holding on August 31, 2024 and sell it today you would lose (1,000.00) from holding ASE Industrial Holding or give up 6.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
ASE Industrial Holding vs. Chia Ta World
Performance |
| Timeline |
| ASE Industrial Holding |
| Chia Ta World |
ASE Industrial and Chia Ta Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASE Industrial and Chia Ta
The main advantage of trading using opposite ASE Industrial and Chia Ta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASE Industrial position performs unexpectedly, Chia Ta 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 Chia Ta will offset losses from the drop in Chia Ta's long position.| ASE Industrial vs. United Microelectronics | ASE Industrial vs. Winbond Electronics Corp | ASE Industrial vs. Macronix International Co |
| Chia Ta vs. Chun Yuan Steel | Chia Ta vs. Chun Yu Works | Chia Ta vs. China Steel Structure | Chia Ta vs. Chih Lien Industrial |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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