Correlation Between ASE Industrial and Amazing Microelectronic
Can any of the company-specific risk be diversified away by investing in both ASE Industrial and Amazing Microelectronic 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 Amazing Microelectronic 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 Amazing Microelectronic, you can compare the effects of market volatilities on ASE Industrial and Amazing Microelectronic 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 Amazing Microelectronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASE Industrial and Amazing Microelectronic.
Diversification Opportunities for ASE Industrial and Amazing Microelectronic
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ASE and Amazing is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding ASE Industrial Holding and Amazing Microelectronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazing Microelectronic 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 Amazing Microelectronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazing Microelectronic has no effect on the direction of ASE Industrial i.e., ASE Industrial and Amazing Microelectronic go up and down completely randomly.
Pair Corralation between ASE Industrial and Amazing Microelectronic
Assuming the 90 days trading horizon ASE Industrial Holding is expected to generate 1.02 times more return on investment than Amazing Microelectronic. However, ASE Industrial is 1.02 times more volatile than Amazing Microelectronic. It trades about 0.05 of its potential returns per unit of risk. Amazing Microelectronic is currently generating about 0.01 per unit of risk. If you would invest 9,800 in ASE Industrial Holding on September 4, 2024 and sell it today you would earn a total of 5,650 from holding ASE Industrial Holding or generate 57.65% 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. Amazing Microelectronic
Performance |
| Timeline |
| ASE Industrial Holding |
| Amazing Microelectronic |
ASE Industrial and Amazing Microelectronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASE Industrial and Amazing Microelectronic
The main advantage of trading using opposite ASE Industrial and Amazing Microelectronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASE Industrial position performs unexpectedly, Amazing Microelectronic 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 Amazing Microelectronic will offset losses from the drop in Amazing Microelectronic'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 |
| Amazing Microelectronic vs. Taiwan Semiconductor Manufacturing | Amazing Microelectronic vs. Yang Ming Marine | Amazing Microelectronic vs. AU Optronics | Amazing Microelectronic vs. Innolux Corp |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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