Correlation Between ASE Industrial and Powerchip Semiconductor
Can any of the company-specific risk be diversified away by investing in both ASE Industrial and Powerchip Semiconductor 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 Powerchip Semiconductor 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 Powerchip Semiconductor Manufacturing, you can compare the effects of market volatilities on ASE Industrial and Powerchip Semiconductor 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 Powerchip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASE Industrial and Powerchip Semiconductor.
Diversification Opportunities for ASE Industrial and Powerchip Semiconductor
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between ASE and Powerchip is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding ASE Industrial Holding and Powerchip Semiconductor Manufa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Powerchip Semiconductor 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 Powerchip Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Powerchip Semiconductor has no effect on the direction of ASE Industrial i.e., ASE Industrial and Powerchip Semiconductor go up and down completely randomly.
Pair Corralation between ASE Industrial and Powerchip Semiconductor
Assuming the 90 days trading horizon ASE Industrial Holding is expected to generate 1.22 times more return on investment than Powerchip Semiconductor. However, ASE Industrial is 1.22 times more volatile than Powerchip Semiconductor Manufacturing. It trades about 0.01 of its potential returns per unit of risk. Powerchip Semiconductor Manufacturing is currently generating about -0.1 per unit of risk. If you would invest 15,300 in ASE Industrial Holding on September 3, 2024 and sell it today you would lose (150.00) from holding ASE Industrial Holding or give up 0.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ASE Industrial Holding vs. Powerchip Semiconductor Manufa
Performance |
| Timeline |
| ASE Industrial Holding |
| Powerchip Semiconductor |
ASE Industrial and Powerchip Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASE Industrial and Powerchip Semiconductor
The main advantage of trading using opposite ASE Industrial and Powerchip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASE Industrial position performs unexpectedly, Powerchip Semiconductor 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 Powerchip Semiconductor will offset losses from the drop in Powerchip Semiconductor'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 |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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