Correlation Between ASE Industrial and Cumberland Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both ASE Industrial and Cumberland Pharmaceuticals 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 Cumberland Pharmaceuticals 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 Cumberland Pharmaceuticals, you can compare the effects of market volatilities on ASE Industrial and Cumberland Pharmaceuticals 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 Cumberland Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASE Industrial and Cumberland Pharmaceuticals.
Diversification Opportunities for ASE Industrial and Cumberland Pharmaceuticals
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between ASE and Cumberland is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding ASE Industrial Holding and Cumberland Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cumberland Pharmaceuticals 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 Cumberland Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cumberland Pharmaceuticals has no effect on the direction of ASE Industrial i.e., ASE Industrial and Cumberland Pharmaceuticals go up and down completely randomly.
Pair Corralation between ASE Industrial and Cumberland Pharmaceuticals
Considering the 90-day investment horizon ASE Industrial is expected to generate 3.66 times less return on investment than Cumberland Pharmaceuticals. But when comparing it to its historical volatility, ASE Industrial Holding is 3.1 times less risky than Cumberland Pharmaceuticals. It trades about 0.11 of its potential returns per unit of risk. Cumberland Pharmaceuticals is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 114.00 in Cumberland Pharmaceuticals on September 4, 2024 and sell it today you would earn a total of 16.00 from holding Cumberland Pharmaceuticals or generate 14.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ASE Industrial Holding vs. Cumberland Pharmaceuticals
Performance |
| Timeline |
| ASE Industrial Holding |
| Cumberland Pharmaceuticals |
ASE Industrial and Cumberland Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASE Industrial and Cumberland Pharmaceuticals
The main advantage of trading using opposite ASE Industrial and Cumberland Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASE Industrial position performs unexpectedly, Cumberland Pharmaceuticals 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 Cumberland Pharmaceuticals will offset losses from the drop in Cumberland Pharmaceuticals' long position.| ASE Industrial vs. United Microelectronics | ASE Industrial vs. Amkor Technology | ASE Industrial vs. Himax Technologies | ASE Industrial vs. Chunghwa Telecom Co |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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