Correlation Between ASE Industrial and Analog Devices
Can any of the company-specific risk be diversified away by investing in both ASE Industrial and Analog Devices 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 Analog Devices 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 Analog Devices, you can compare the effects of market volatilities on ASE Industrial and Analog Devices 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 Analog Devices. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASE Industrial and Analog Devices.
Diversification Opportunities for ASE Industrial and Analog Devices
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ASE and Analog is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding ASE Industrial Holding and Analog Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Analog Devices 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 Analog Devices. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Analog Devices has no effect on the direction of ASE Industrial i.e., ASE Industrial and Analog Devices go up and down completely randomly.
Pair Corralation between ASE Industrial and Analog Devices
Considering the 90-day investment horizon ASE Industrial is expected to generate 1.12 times less return on investment than Analog Devices. In addition to that, ASE Industrial is 1.11 times more volatile than Analog Devices. It trades about 0.04 of its total potential returns per unit of risk. Analog Devices is currently generating about 0.05 per unit of volatility. If you would invest 18,202 in Analog Devices on September 2, 2024 and sell it today you would earn a total of 3,603 from holding Analog Devices or generate 19.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ASE Industrial Holding vs. Analog Devices
Performance |
| Timeline |
| ASE Industrial Holding |
| Analog Devices |
ASE Industrial and Analog Devices Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASE Industrial and Analog Devices
The main advantage of trading using opposite ASE Industrial and Analog Devices positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASE Industrial position performs unexpectedly, Analog Devices 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 Analog Devices will offset losses from the drop in Analog Devices' long position.| ASE Industrial vs. NXP Semiconductors NV | ASE Industrial vs. GSI Technology | ASE Industrial vs. MaxLinear | ASE Industrial vs. Texas Instruments Incorporated |
| Analog Devices vs. NXP Semiconductors NV | Analog Devices vs. Qualcomm Incorporated | Analog Devices vs. Broadcom | Analog Devices vs. Microchip 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
Other Complementary Tools
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes |