Correlation Between ASE Industrial and Advantech
Can any of the company-specific risk be diversified away by investing in both ASE Industrial and Advantech 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 Advantech 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 Advantech Co, you can compare the effects of market volatilities on ASE Industrial and Advantech 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 Advantech. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASE Industrial and Advantech.
Diversification Opportunities for ASE Industrial and Advantech
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between ASE and Advantech is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding ASE Industrial Holding and Advantech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advantech 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 Advantech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advantech has no effect on the direction of ASE Industrial i.e., ASE Industrial and Advantech go up and down completely randomly.
Pair Corralation between ASE Industrial and Advantech
Assuming the 90 days trading horizon ASE Industrial Holding is expected to under-perform the Advantech. In addition to that, ASE Industrial is 1.37 times more volatile than Advantech Co. It trades about -0.01 of its total potential returns per unit of risk. Advantech Co is currently generating about 0.15 per unit of volatility. If you would invest 32,200 in Advantech Co on September 3, 2024 and sell it today you would earn a total of 1,350 from holding Advantech Co or generate 4.19% 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. Advantech Co
Performance |
| Timeline |
| ASE Industrial Holding |
| Advantech |
ASE Industrial and Advantech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASE Industrial and Advantech
The main advantage of trading using opposite ASE Industrial and Advantech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASE Industrial position performs unexpectedly, Advantech 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 Advantech will offset losses from the drop in Advantech'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 |
| Advantech vs. Taiwan Semiconductor Manufacturing | Advantech vs. Yang Ming Marine | Advantech vs. ASE Industrial Holding | Advantech 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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