Correlation Between ASE Industrial and Ledtech Electronics
Can any of the company-specific risk be diversified away by investing in both ASE Industrial and Ledtech Electronics 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 Ledtech Electronics 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 Ledtech Electronics Corp, you can compare the effects of market volatilities on ASE Industrial and Ledtech Electronics 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 Ledtech Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASE Industrial and Ledtech Electronics.
Diversification Opportunities for ASE Industrial and Ledtech Electronics
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ASE and Ledtech is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding ASE Industrial Holding and Ledtech Electronics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ledtech Electronics Corp 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 Ledtech Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ledtech Electronics Corp has no effect on the direction of ASE Industrial i.e., ASE Industrial and Ledtech Electronics go up and down completely randomly.
Pair Corralation between ASE Industrial and Ledtech Electronics
Assuming the 90 days trading horizon ASE Industrial Holding is expected to generate 0.82 times more return on investment than Ledtech Electronics. However, ASE Industrial Holding is 1.22 times less risky than Ledtech Electronics. It trades about 0.04 of its potential returns per unit of risk. Ledtech Electronics Corp is currently generating about 0.02 per unit of risk. If you would invest 12,650 in ASE Industrial Holding on September 12, 2024 and sell it today you would earn a total of 3,150 from holding ASE Industrial Holding or generate 24.9% 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. Ledtech Electronics Corp
Performance |
| Timeline |
| ASE Industrial Holding |
| Ledtech Electronics Corp |
ASE Industrial and Ledtech Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASE Industrial and Ledtech Electronics
The main advantage of trading using opposite ASE Industrial and Ledtech Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASE Industrial position performs unexpectedly, Ledtech Electronics 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 Ledtech Electronics will offset losses from the drop in Ledtech Electronics' long position.| ASE Industrial vs. AU Optronics | ASE Industrial vs. Innolux Corp | ASE Industrial vs. Ruentex Development Co | ASE Industrial vs. WiseChip Semiconductor |
| Ledtech Electronics vs. AU Optronics | Ledtech Electronics vs. Innolux Corp | Ledtech Electronics vs. Ruentex Development Co | Ledtech Electronics vs. WiseChip Semiconductor |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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