Correlation Between ASE Industrial and Lihtai Construction
Can any of the company-specific risk be diversified away by investing in both ASE Industrial and Lihtai Construction 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 Lihtai Construction 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 Lihtai Construction Enterprise, you can compare the effects of market volatilities on ASE Industrial and Lihtai Construction 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 Lihtai Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASE Industrial and Lihtai Construction.
Diversification Opportunities for ASE Industrial and Lihtai Construction
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ASE and Lihtai is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding ASE Industrial Holding and Lihtai Construction Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lihtai Construction 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 Lihtai Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lihtai Construction has no effect on the direction of ASE Industrial i.e., ASE Industrial and Lihtai Construction go up and down completely randomly.
Pair Corralation between ASE Industrial and Lihtai Construction
Assuming the 90 days trading horizon ASE Industrial Holding is expected to under-perform the Lihtai Construction. In addition to that, ASE Industrial is 4.39 times more volatile than Lihtai Construction Enterprise. It trades about -0.03 of its total potential returns per unit of risk. Lihtai Construction Enterprise is currently generating about 0.03 per unit of volatility. If you would invest 8,080 in Lihtai Construction Enterprise on September 2, 2024 and sell it today you would earn a total of 20.00 from holding Lihtai Construction Enterprise or generate 0.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ASE Industrial Holding vs. Lihtai Construction Enterprise
Performance |
| Timeline |
| ASE Industrial Holding |
| Lihtai Construction |
ASE Industrial and Lihtai Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASE Industrial and Lihtai Construction
The main advantage of trading using opposite ASE Industrial and Lihtai Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASE Industrial position performs unexpectedly, Lihtai Construction 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 Lihtai Construction will offset losses from the drop in Lihtai Construction's long position.The idea behind ASE Industrial Holding and Lihtai Construction Enterprise 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.| Lihtai Construction vs. Data International Co | Lihtai Construction vs. Dimerco Data System | Lihtai Construction vs. K Way Information | Lihtai Construction vs. Newretail 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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