Correlation Between ASE Industrial and HE Equipment
Can any of the company-specific risk be diversified away by investing in both ASE Industrial and HE Equipment 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 HE Equipment 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 HE Equipment Services, you can compare the effects of market volatilities on ASE Industrial and HE Equipment 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 HE Equipment. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASE Industrial and HE Equipment.
Diversification Opportunities for ASE Industrial and HE Equipment
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between ASE and HEES is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding ASE Industrial Holding and HE Equipment Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HE Equipment Services 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 HE Equipment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HE Equipment Services has no effect on the direction of ASE Industrial i.e., ASE Industrial and HE Equipment go up and down completely randomly.
Pair Corralation between ASE Industrial and HE Equipment
Considering the 90-day investment horizon ASE Industrial Holding is expected to generate 0.87 times more return on investment than HE Equipment. However, ASE Industrial Holding is 1.15 times less risky than HE Equipment. It trades about 0.04 of its potential returns per unit of risk. HE Equipment Services is currently generating about -0.11 per unit of risk. If you would invest 969.00 in ASE Industrial Holding on September 12, 2024 and sell it today you would earn a total of 12.00 from holding ASE Industrial Holding or generate 1.24% 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. HE Equipment Services
Performance |
| Timeline |
| ASE Industrial Holding |
| HE Equipment Services |
ASE Industrial and HE Equipment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASE Industrial and HE Equipment
The main advantage of trading using opposite ASE Industrial and HE Equipment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASE Industrial position performs unexpectedly, HE Equipment 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 HE Equipment will offset losses from the drop in HE Equipment's long position.| ASE Industrial vs. NVIDIA | ASE Industrial vs. Taiwan Semiconductor Manufacturing | ASE Industrial vs. Micron Technology | ASE Industrial vs. Qualcomm Incorporated |
| HE Equipment vs. GATX Corporation | HE Equipment vs. McGrath RentCorp | HE Equipment vs. Alta Equipment Group | HE Equipment vs. Ryder System |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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