Correlation Between ASE Industrial and Everlight Electronics
Can any of the company-specific risk be diversified away by investing in both ASE Industrial and Everlight Electronics 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 Everlight Electronics 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 Everlight Electronics Co, you can compare the effects of market volatilities on ASE Industrial and Everlight Electronics 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 Everlight Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASE Industrial and Everlight Electronics.
Diversification Opportunities for ASE Industrial and Everlight Electronics
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between ASE and Everlight is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding ASE Industrial Holding and Everlight Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everlight Electronics 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 Everlight Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everlight Electronics has no effect on the direction of ASE Industrial i.e., ASE Industrial and Everlight Electronics go up and down completely randomly.
Pair Corralation between ASE Industrial and Everlight Electronics
Assuming the 90 days trading horizon ASE Industrial is expected to generate 2.36 times less return on investment than Everlight Electronics. In addition to that, ASE Industrial is 1.24 times more volatile than Everlight Electronics Co. It trades about 0.04 of its total potential returns per unit of risk. Everlight Electronics Co is currently generating about 0.12 per unit of volatility. If you would invest 4,695 in Everlight Electronics Co on September 4, 2024 and sell it today you would earn a total of 3,205 from holding Everlight Electronics Co or generate 68.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ASE Industrial Holding vs. Everlight Electronics Co
Performance |
| Timeline |
| ASE Industrial Holding |
| Everlight Electronics |
ASE Industrial and Everlight Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASE Industrial and Everlight Electronics
The main advantage of trading using opposite ASE Industrial and Everlight Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASE Industrial position performs unexpectedly, Everlight Electronics 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 Everlight Electronics will offset losses from the drop in Everlight Electronics' long position.| ASE Industrial vs. Taiwan Semiconductor Manufacturing | ASE Industrial vs. Yang Ming Marine | ASE Industrial vs. AU Optronics | ASE Industrial vs. Innolux Corp |
| Everlight Electronics vs. Taiwan Semiconductor Manufacturing | Everlight Electronics vs. Yang Ming Marine | Everlight Electronics vs. AU Optronics | Everlight Electronics vs. Innolux Corp |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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