Correlation Between ASE Industrial and Ares International
Can any of the company-specific risk be diversified away by investing in both ASE Industrial and Ares International 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 Ares International 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 Ares International Corp, you can compare the effects of market volatilities on ASE Industrial and Ares International 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 Ares International. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASE Industrial and Ares International.
Diversification Opportunities for ASE Industrial and Ares International
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between ASE and Ares is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding ASE Industrial Holding and Ares International Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares International Corp 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 Ares International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ares International Corp has no effect on the direction of ASE Industrial i.e., ASE Industrial and Ares International go up and down completely randomly.
Pair Corralation between ASE Industrial and Ares International
Assuming the 90 days trading horizon ASE Industrial Holding is expected to generate 2.03 times more return on investment than Ares International. However, ASE Industrial is 2.03 times more volatile than Ares International Corp. It trades about 0.01 of its potential returns per unit of risk. Ares International Corp is currently generating about -0.14 per unit of risk. If you would invest 15,150 in ASE Industrial Holding on September 3, 2024 and sell it today you would earn a total of 0.00 from holding ASE Industrial Holding or generate 0.0% 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. Ares International Corp
Performance |
| Timeline |
| ASE Industrial Holding |
| Ares International Corp |
ASE Industrial and Ares International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASE Industrial and Ares International
The main advantage of trading using opposite ASE Industrial and Ares International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASE Industrial position performs unexpectedly, Ares International 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 Ares International will offset losses from the drop in Ares International'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 |
| Ares International vs. Taiwan Semiconductor Manufacturing | Ares International vs. Yang Ming Marine | Ares International vs. ASE Industrial Holding | Ares International 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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