Correlation Between ASE Industrial and Song Ho
Can any of the company-specific risk be diversified away by investing in both ASE Industrial and Song Ho 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 Song Ho 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 Song Ho Industrial, you can compare the effects of market volatilities on ASE Industrial and Song Ho 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 Song Ho. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASE Industrial and Song Ho.
Diversification Opportunities for ASE Industrial and Song Ho
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ASE and Song is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding ASE Industrial Holding and Song Ho Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Song Ho Industrial 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 Song Ho. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Song Ho Industrial has no effect on the direction of ASE Industrial i.e., ASE Industrial and Song Ho go up and down completely randomly.
Pair Corralation between ASE Industrial and Song Ho
Assuming the 90 days trading horizon ASE Industrial Holding is expected to generate 3.41 times more return on investment than Song Ho. However, ASE Industrial is 3.41 times more volatile than Song Ho Industrial. It trades about 0.03 of its potential returns per unit of risk. Song Ho Industrial is currently generating about -0.01 per unit of risk. If you would invest 12,550 in ASE Industrial Holding on September 2, 2024 and sell it today you would earn a total of 2,600 from holding ASE Industrial Holding or generate 20.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
ASE Industrial Holding vs. Song Ho Industrial
Performance |
| Timeline |
| ASE Industrial Holding |
| Song Ho Industrial |
ASE Industrial and Song Ho Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASE Industrial and Song Ho
The main advantage of trading using opposite ASE Industrial and Song Ho positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASE Industrial position performs unexpectedly, Song Ho 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 Song Ho will offset losses from the drop in Song Ho's long position.The idea behind ASE Industrial Holding and Song Ho Industrial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Song Ho vs. Elite Semiconductor Memory | Song Ho vs. Founding Construction Development | Song Ho vs. uPI Semiconductor Corp | Song Ho vs. Hung Sheng Construction |
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 CEOs Directory module to screen CEOs from public companies around the world.
Other Complementary Tools
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |