Correlation Between ASE Industrial and China Aircraft
Can any of the company-specific risk be diversified away by investing in both ASE Industrial and China Aircraft 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 China Aircraft 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 China Aircraft Leasing, you can compare the effects of market volatilities on ASE Industrial and China Aircraft 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 China Aircraft. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASE Industrial and China Aircraft.
Diversification Opportunities for ASE Industrial and China Aircraft
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between ASE and China is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding ASE Industrial Holding and China Aircraft Leasing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Aircraft Leasing 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 China Aircraft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Aircraft Leasing has no effect on the direction of ASE Industrial i.e., ASE Industrial and China Aircraft go up and down completely randomly.
Pair Corralation between ASE Industrial and China Aircraft
Considering the 90-day investment horizon ASE Industrial Holding is expected to under-perform the China Aircraft. But the stock apears to be less risky and, when comparing its historical volatility, ASE Industrial Holding is 2.43 times less risky than China Aircraft. The stock trades about -0.01 of its potential returns per unit of risk. The China Aircraft Leasing is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 19.00 in China Aircraft Leasing on September 2, 2024 and sell it today you would earn a total of 21.00 from holding China Aircraft Leasing or generate 110.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ASE Industrial Holding vs. China Aircraft Leasing
Performance |
| Timeline |
| ASE Industrial Holding |
| China Aircraft Leasing |
ASE Industrial and China Aircraft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASE Industrial and China Aircraft
The main advantage of trading using opposite ASE Industrial and China Aircraft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASE Industrial position performs unexpectedly, China Aircraft 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 China Aircraft will offset losses from the drop in China Aircraft's long position.| ASE Industrial vs. NXP Semiconductors NV | ASE Industrial vs. GSI Technology | ASE Industrial vs. MaxLinear | ASE Industrial vs. Texas Instruments Incorporated |
| China Aircraft vs. Ambev SA ADR | China Aircraft vs. Volaris | China Aircraft vs. Copa Holdings SA | China Aircraft vs. Molson Coors Brewing |
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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