Correlation Between Vanguard International and ASE Industrial
Can any of the company-specific risk be diversified away by investing in both Vanguard International and ASE Industrial 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 Vanguard International and ASE Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard International Semiconductor and ASE Industrial Holding, you can compare the effects of market volatilities on Vanguard International and ASE Industrial 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 Vanguard International with a short position of ASE Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard International and ASE Industrial.
Diversification Opportunities for Vanguard International and ASE Industrial
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vanguard and ASE is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard International Semicon and ASE Industrial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASE Industrial Holding and Vanguard International 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 Vanguard International Semiconductor are associated (or correlated) with ASE Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASE Industrial Holding has no effect on the direction of Vanguard International i.e., Vanguard International and ASE Industrial go up and down completely randomly.
Pair Corralation between Vanguard International and ASE Industrial
Assuming the 90 days trading horizon Vanguard International Semiconductor is expected to under-perform the ASE Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Vanguard International Semiconductor is 1.07 times less risky than ASE Industrial. The stock trades about -0.02 of its potential returns per unit of risk. The ASE Industrial Holding is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 15,700 in ASE Industrial Holding on September 3, 2024 and sell it today you would lose (550.00) from holding ASE Industrial Holding or give up 3.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard International Semicon vs. ASE Industrial Holding
Performance |
| Timeline |
| Vanguard International |
| ASE Industrial Holding |
Vanguard International and ASE Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard International and ASE Industrial
The main advantage of trading using opposite Vanguard International and ASE Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard International position performs unexpectedly, ASE Industrial 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 ASE Industrial will offset losses from the drop in ASE Industrial's long position.The idea behind Vanguard International Semiconductor and ASE Industrial Holding 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.
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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