Correlation Between Asm Pacific and Rohm Co
Can any of the company-specific risk be diversified away by investing in both Asm Pacific and Rohm Co 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 Rohm Co 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 Rohm Co Ltd, you can compare the effects of market volatilities on Asm Pacific and Rohm Co 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 Rohm Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asm Pacific and Rohm Co.
Diversification Opportunities for Asm Pacific and Rohm Co
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Asm and Rohm is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Asm Pacific Technology and Rohm Co Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rohm Co 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 Rohm Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rohm Co has no effect on the direction of Asm Pacific i.e., Asm Pacific and Rohm Co go up and down completely randomly.
Pair Corralation between Asm Pacific and Rohm Co
Assuming the 90 days horizon Asm Pacific Technology is expected to generate 1.31 times more return on investment than Rohm Co. However, Asm Pacific is 1.31 times more volatile than Rohm Co Ltd. It trades about 0.01 of its potential returns per unit of risk. Rohm Co Ltd is currently generating about -0.11 per unit of risk. If you would invest 3,021 in Asm Pacific Technology on August 26, 2024 and sell it today you would lose (227.00) from holding Asm Pacific Technology or give up 7.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Asm Pacific Technology vs. Rohm Co Ltd
Performance |
| Timeline |
| Asm Pacific Technology |
| Rohm Co |
Asm Pacific and Rohm Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asm Pacific and Rohm Co
The main advantage of trading using opposite Asm Pacific and Rohm Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asm Pacific position performs unexpectedly, Rohm Co 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 Rohm Co will offset losses from the drop in Rohm Co's long position.| Asm Pacific vs. Disco Corp ADR | Asm Pacific vs. Tokyo Electron | Asm Pacific vs. Lasertec | Asm Pacific vs. Sumco Corp ADR |
| Rohm Co vs. Renesas Electronics | Rohm Co vs. Power Integrations | Rohm Co vs. MACOM Technology Solutions | Rohm Co vs. Renesas Electronics 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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