Correlation Between ASE Industrial and Fortune Information
Can any of the company-specific risk be diversified away by investing in both ASE Industrial and Fortune Information 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 Fortune Information 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 Fortune Information Systems, you can compare the effects of market volatilities on ASE Industrial and Fortune Information 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 Fortune Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASE Industrial and Fortune Information.
Diversification Opportunities for ASE Industrial and Fortune Information
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ASE and Fortune is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding ASE Industrial Holding and Fortune Information Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortune Information 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 Fortune Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortune Information has no effect on the direction of ASE Industrial i.e., ASE Industrial and Fortune Information go up and down completely randomly.
Pair Corralation between ASE Industrial and Fortune Information
Assuming the 90 days trading horizon ASE Industrial is expected to generate 11.85 times less return on investment than Fortune Information. But when comparing it to its historical volatility, ASE Industrial Holding is 1.44 times less risky than Fortune Information. It trades about 0.01 of its potential returns per unit of risk. Fortune Information Systems is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,355 in Fortune Information Systems on September 12, 2024 and sell it today you would earn a total of 185.00 from holding Fortune Information Systems or generate 7.86% 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. Fortune Information Systems
Performance |
| Timeline |
| ASE Industrial Holding |
| Fortune Information |
ASE Industrial and Fortune Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASE Industrial and Fortune Information
The main advantage of trading using opposite ASE Industrial and Fortune Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASE Industrial position performs unexpectedly, Fortune Information 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 Fortune Information will offset losses from the drop in Fortune Information's long position.| ASE Industrial vs. AU Optronics | ASE Industrial vs. Innolux Corp | ASE Industrial vs. Ruentex Development Co | ASE Industrial vs. WiseChip Semiconductor |
| Fortune Information vs. AU Optronics | Fortune Information vs. Innolux Corp | Fortune Information vs. Ruentex Development Co | Fortune Information vs. WiseChip Semiconductor |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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