Correlation Between ASE Industrial and Microelectronics
Can any of the company-specific risk be diversified away by investing in both ASE Industrial and Microelectronics 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 Microelectronics 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 Microelectronics Technology, you can compare the effects of market volatilities on ASE Industrial and Microelectronics 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 Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASE Industrial and Microelectronics.
Diversification Opportunities for ASE Industrial and Microelectronics
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between ASE and Microelectronics is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding ASE Industrial Holding and Microelectronics Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microelectronics Tec 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 Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microelectronics Tec has no effect on the direction of ASE Industrial i.e., ASE Industrial and Microelectronics go up and down completely randomly.
Pair Corralation between ASE Industrial and Microelectronics
Assuming the 90 days trading horizon ASE Industrial Holding is expected to generate 0.85 times more return on investment than Microelectronics. However, ASE Industrial Holding is 1.17 times less risky than Microelectronics. It trades about 0.05 of its potential returns per unit of risk. Microelectronics Technology is currently generating about -0.01 per unit of risk. If you would invest 9,630 in ASE Industrial Holding on September 3, 2024 and sell it today you would earn a total of 5,520 from holding ASE Industrial Holding or generate 57.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ASE Industrial Holding vs. Microelectronics Technology
Performance |
| Timeline |
| ASE Industrial Holding |
| Microelectronics Tec |
ASE Industrial and Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASE Industrial and Microelectronics
The main advantage of trading using opposite ASE Industrial and Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASE Industrial position performs unexpectedly, Microelectronics 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 Microelectronics will offset losses from the drop in Microelectronics' long position.| ASE Industrial vs. Delta Electronics | ASE Industrial vs. Novatek Microelectronics Corp | ASE Industrial vs. United Microelectronics | ASE Industrial vs. LARGAN Precision Co |
| Microelectronics vs. Taiwan Semiconductor Manufacturing | Microelectronics vs. Yang Ming Marine | Microelectronics vs. ASE Industrial Holding | Microelectronics vs. AU Optronics |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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