Correlation Between ASE Industrial and Integrated Service
Can any of the company-specific risk be diversified away by investing in both ASE Industrial and Integrated Service 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 Integrated Service 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 Integrated Service Technology, you can compare the effects of market volatilities on ASE Industrial and Integrated Service 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 Integrated Service. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASE Industrial and Integrated Service.
Diversification Opportunities for ASE Industrial and Integrated Service
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ASE and Integrated is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding ASE Industrial Holding and Integrated Service Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Integrated Service 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 Integrated Service. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Integrated Service has no effect on the direction of ASE Industrial i.e., ASE Industrial and Integrated Service go up and down completely randomly.
Pair Corralation between ASE Industrial and Integrated Service
Assuming the 90 days trading horizon ASE Industrial Holding is expected to generate 0.59 times more return on investment than Integrated Service. However, ASE Industrial Holding is 1.69 times less risky than Integrated Service. It trades about -0.09 of its potential returns per unit of risk. Integrated Service Technology is currently generating about -0.41 per unit of risk. If you would invest 16,200 in ASE Industrial Holding on August 26, 2024 and sell it today you would lose (550.00) from holding ASE Industrial Holding or give up 3.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ASE Industrial Holding vs. Integrated Service Technology
Performance |
| Timeline |
| ASE Industrial Holding |
| Integrated Service |
ASE Industrial and Integrated Service Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASE Industrial and Integrated Service
The main advantage of trading using opposite ASE Industrial and Integrated Service positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASE Industrial position performs unexpectedly, Integrated Service 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 Integrated Service will offset losses from the drop in Integrated Service's long position.| ASE Industrial vs. Novatek Microelectronics Corp | ASE Industrial vs. Quanta Computer | ASE Industrial vs. United Microelectronics |
| Integrated Service vs. U Ming Marine Transport | Integrated Service vs. Shan Loong Transportation Co | Integrated Service vs. Microelectronics Technology | Integrated Service vs. Ligitek Electronics Co |
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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