Correlation Between Asm Pacific and Archer Materials
Can any of the company-specific risk be diversified away by investing in both Asm Pacific and Archer Materials 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 Asm Pacific and Archer Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asm Pacific Technology and Archer Materials Limited, you can compare the effects of market volatilities on Asm Pacific and Archer Materials 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 Asm Pacific with a short position of Archer Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asm Pacific and Archer Materials.
Diversification Opportunities for Asm Pacific and Archer Materials
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Asm and Archer is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Asm Pacific Technology and Archer Materials Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Archer Materials and Asm Pacific 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 Asm Pacific Technology are associated (or correlated) with Archer Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Archer Materials has no effect on the direction of Asm Pacific i.e., Asm Pacific and Archer Materials go up and down completely randomly.
Pair Corralation between Asm Pacific and Archer Materials
Assuming the 90 days horizon Asm Pacific is expected to generate 7.35 times less return on investment than Archer Materials. But when comparing it to its historical volatility, Asm Pacific Technology is 3.53 times less risky than Archer Materials. It trades about 0.02 of its potential returns per unit of risk. Archer Materials Limited is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 24.00 in Archer Materials Limited on September 14, 2024 and sell it today you would lose (4.00) from holding Archer Materials Limited or give up 16.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Asm Pacific Technology vs. Archer Materials Limited
Performance |
| Timeline |
| Asm Pacific Technology |
| Archer Materials |
Asm Pacific and Archer Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asm Pacific and Archer Materials
The main advantage of trading using opposite Asm Pacific and Archer Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asm Pacific position performs unexpectedly, Archer Materials 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 Archer Materials will offset losses from the drop in Archer Materials' long position.| Asm Pacific vs. Tokyo Electron | Asm Pacific vs. Lasertec | Asm Pacific vs. Sumco Corp ADR | Asm Pacific vs. AIXTRON SE |
| Archer Materials vs. STMicroelectronics NV | Archer Materials vs. Rohm Co Ltd | Archer Materials vs. Asm Pacific Technology |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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