Correlation Between ASE Industrial and Radiant Opto
Can any of the company-specific risk be diversified away by investing in both ASE Industrial and Radiant Opto 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 Radiant Opto 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 Radiant Opto Electronics Corp, you can compare the effects of market volatilities on ASE Industrial and Radiant Opto 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 Radiant Opto. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASE Industrial and Radiant Opto.
Diversification Opportunities for ASE Industrial and Radiant Opto
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between ASE and Radiant is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding ASE Industrial Holding and Radiant Opto Electronics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radiant Opto Electro 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 Radiant Opto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Radiant Opto Electro has no effect on the direction of ASE Industrial i.e., ASE Industrial and Radiant Opto go up and down completely randomly.
Pair Corralation between ASE Industrial and Radiant Opto
Assuming the 90 days trading horizon ASE Industrial Holding is expected to generate 1.16 times more return on investment than Radiant Opto. However, ASE Industrial is 1.16 times more volatile than Radiant Opto Electronics Corp. It trades about -0.01 of its potential returns per unit of risk. Radiant Opto Electronics Corp is currently generating about -0.2 per unit of risk. If you would invest 15,250 in ASE Industrial Holding on September 3, 2024 and sell it today you would lose (100.00) from holding ASE Industrial Holding or give up 0.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ASE Industrial Holding vs. Radiant Opto Electronics Corp
Performance |
| Timeline |
| ASE Industrial Holding |
| Radiant Opto Electro |
ASE Industrial and Radiant Opto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASE Industrial and Radiant Opto
The main advantage of trading using opposite ASE Industrial and Radiant Opto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASE Industrial position performs unexpectedly, Radiant Opto 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 Radiant Opto will offset losses from the drop in Radiant Opto's long position.| ASE Industrial vs. Delta Electronics | ASE Industrial vs. Novatek Microelectronics Corp | ASE Industrial vs. United Microelectronics | ASE Industrial vs. LARGAN Precision Co |
| Radiant Opto vs. Taiwan Semiconductor Manufacturing | Radiant Opto vs. Yang Ming Marine | Radiant Opto vs. ASE Industrial Holding | Radiant Opto 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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