Correlation Between ASE Industrial and Bright Led
Can any of the company-specific risk be diversified away by investing in both ASE Industrial and Bright Led 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 Bright Led 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 Bright Led Electronics, you can compare the effects of market volatilities on ASE Industrial and Bright Led 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 Bright Led. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASE Industrial and Bright Led.
Diversification Opportunities for ASE Industrial and Bright Led
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ASE and Bright is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding ASE Industrial Holding and Bright Led Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bright Led 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 Bright Led. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bright Led Electronics has no effect on the direction of ASE Industrial i.e., ASE Industrial and Bright Led go up and down completely randomly.
Pair Corralation between ASE Industrial and Bright Led
Assuming the 90 days trading horizon ASE Industrial Holding is expected to generate 1.03 times more return on investment than Bright Led. However, ASE Industrial is 1.03 times more volatile than Bright Led Electronics. It trades about 0.05 of its potential returns per unit of risk. Bright Led Electronics is currently generating about 0.04 per unit of risk. If you would invest 9,800 in ASE Industrial Holding on September 4, 2024 and sell it today you would earn a total of 5,650 from holding ASE Industrial Holding or generate 57.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ASE Industrial Holding vs. Bright Led Electronics
Performance |
| Timeline |
| ASE Industrial Holding |
| Bright Led Electronics |
ASE Industrial and Bright Led Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASE Industrial and Bright Led
The main advantage of trading using opposite ASE Industrial and Bright Led positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASE Industrial position performs unexpectedly, Bright Led 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 Bright Led will offset losses from the drop in Bright Led's long position.| ASE Industrial vs. Taiwan Semiconductor Manufacturing | ASE Industrial vs. Yang Ming Marine | ASE Industrial vs. AU Optronics | ASE Industrial vs. Innolux Corp |
| Bright Led vs. Taiwan Semiconductor Manufacturing | Bright Led vs. Yang Ming Marine | Bright Led vs. ASE Industrial Holding | Bright Led 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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