Correlation Between ASE Industrial and Chroma ATE
Can any of the company-specific risk be diversified away by investing in both ASE Industrial and Chroma ATE 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 Chroma ATE 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 Chroma ATE, you can compare the effects of market volatilities on ASE Industrial and Chroma ATE 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 Chroma ATE. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASE Industrial and Chroma ATE.
Diversification Opportunities for ASE Industrial and Chroma ATE
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ASE and Chroma is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding ASE Industrial Holding and Chroma ATE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chroma ATE 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 Chroma ATE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chroma ATE has no effect on the direction of ASE Industrial i.e., ASE Industrial and Chroma ATE go up and down completely randomly.
Pair Corralation between ASE Industrial and Chroma ATE
Assuming the 90 days trading horizon ASE Industrial is expected to generate 28.61 times less return on investment than Chroma ATE. But when comparing it to its historical volatility, ASE Industrial Holding is 1.15 times less risky than Chroma ATE. It trades about 0.0 of its potential returns per unit of risk. Chroma ATE is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 27,650 in Chroma ATE on September 3, 2024 and sell it today you would earn a total of 13,600 from holding Chroma ATE or generate 49.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ASE Industrial Holding vs. Chroma ATE
Performance |
| Timeline |
| ASE Industrial Holding |
| Chroma ATE |
ASE Industrial and Chroma ATE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASE Industrial and Chroma ATE
The main advantage of trading using opposite ASE Industrial and Chroma ATE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASE Industrial position performs unexpectedly, Chroma ATE 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 Chroma ATE will offset losses from the drop in Chroma ATE's long position.| ASE Industrial vs. Delta Electronics | ASE Industrial vs. Novatek Microelectronics Corp | ASE Industrial vs. United Microelectronics | ASE Industrial vs. LARGAN Precision Co |
| Chroma ATE vs. Taiwan Semiconductor Manufacturing | Chroma ATE vs. Yang Ming Marine | Chroma ATE vs. ASE Industrial Holding | Chroma ATE 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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