Correlation Between ASE Industrial and AVer Information
Can any of the company-specific risk be diversified away by investing in both ASE Industrial and AVer 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 AVer 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 AVer Information, you can compare the effects of market volatilities on ASE Industrial and AVer 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 AVer Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASE Industrial and AVer Information.
Diversification Opportunities for ASE Industrial and AVer Information
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between ASE and AVer is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding ASE Industrial Holding and AVer Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AVer 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 AVer Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AVer Information has no effect on the direction of ASE Industrial i.e., ASE Industrial and AVer Information go up and down completely randomly.
Pair Corralation between ASE Industrial and AVer Information
Assuming the 90 days trading horizon ASE Industrial Holding is expected to generate 0.92 times more return on investment than AVer Information. However, ASE Industrial Holding is 1.09 times less risky than AVer Information. It trades about 0.06 of its potential returns per unit of risk. AVer Information is currently generating about -0.01 per unit of risk. If you would invest 11,550 in ASE Industrial Holding on September 4, 2024 and sell it today you would earn a total of 3,900 from holding ASE Industrial Holding or generate 33.77% 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. AVer Information
Performance |
| Timeline |
| ASE Industrial Holding |
| AVer Information |
ASE Industrial and AVer Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASE Industrial and AVer Information
The main advantage of trading using opposite ASE Industrial and AVer Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASE Industrial position performs unexpectedly, AVer 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 AVer Information will offset losses from the drop in AVer Information'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 |
| AVer Information vs. Taiwan Semiconductor Manufacturing | AVer Information vs. Yang Ming Marine | AVer Information vs. ASE Industrial Holding | AVer Information 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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