Correlation Between ASE Industrial and Globalfoundries
Can any of the company-specific risk be diversified away by investing in both ASE Industrial and Globalfoundries 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 Globalfoundries 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 Globalfoundries, you can compare the effects of market volatilities on ASE Industrial and Globalfoundries 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 Globalfoundries. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASE Industrial and Globalfoundries.
Diversification Opportunities for ASE Industrial and Globalfoundries
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between ASE and Globalfoundries is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding ASE Industrial Holding and Globalfoundries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globalfoundries 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 Globalfoundries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globalfoundries has no effect on the direction of ASE Industrial i.e., ASE Industrial and Globalfoundries go up and down completely randomly.
Pair Corralation between ASE Industrial and Globalfoundries
Considering the 90-day investment horizon ASE Industrial is expected to generate 6.78 times less return on investment than Globalfoundries. But when comparing it to its historical volatility, ASE Industrial Holding is 2.6 times less risky than Globalfoundries. It trades about 0.08 of its potential returns per unit of risk. Globalfoundries is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 3,601 in Globalfoundries on September 5, 2024 and sell it today you would earn a total of 837.00 from holding Globalfoundries or generate 23.24% 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. Globalfoundries
Performance |
| Timeline |
| ASE Industrial Holding |
| Globalfoundries |
ASE Industrial and Globalfoundries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASE Industrial and Globalfoundries
The main advantage of trading using opposite ASE Industrial and Globalfoundries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASE Industrial position performs unexpectedly, Globalfoundries 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 Globalfoundries will offset losses from the drop in Globalfoundries' long position.| ASE Industrial vs. NXP Semiconductors NV | ASE Industrial vs. Monolithic Power Systems | ASE Industrial vs. ON Semiconductor | ASE Industrial vs. GSI Technology |
| Globalfoundries vs. NXP Semiconductors NV | Globalfoundries vs. Analog Devices | Globalfoundries vs. ON Semiconductor | Globalfoundries vs. Lattice Semiconductor |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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