Correlation Between ASE Industrial and Nature Wood
Can any of the company-specific risk be diversified away by investing in both ASE Industrial and Nature Wood 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 Nature Wood 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 Nature Wood Group, you can compare the effects of market volatilities on ASE Industrial and Nature Wood 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 Nature Wood. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASE Industrial and Nature Wood.
Diversification Opportunities for ASE Industrial and Nature Wood
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between ASE and Nature is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding ASE Industrial Holding and Nature Wood Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nature Wood Group 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 Nature Wood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nature Wood Group has no effect on the direction of ASE Industrial i.e., ASE Industrial and Nature Wood go up and down completely randomly.
Pair Corralation between ASE Industrial and Nature Wood
Considering the 90-day investment horizon ASE Industrial Holding is expected to generate 0.3 times more return on investment than Nature Wood. However, ASE Industrial Holding is 3.37 times less risky than Nature Wood. It trades about 0.06 of its potential returns per unit of risk. Nature Wood Group is currently generating about -0.04 per unit of risk. If you would invest 601.00 in ASE Industrial Holding on September 3, 2024 and sell it today you would earn a total of 371.00 from holding ASE Industrial Holding or generate 61.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 62.42% |
| Values | Daily Returns |
ASE Industrial Holding vs. Nature Wood Group
Performance |
| Timeline |
| ASE Industrial Holding |
| Nature Wood Group |
ASE Industrial and Nature Wood Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASE Industrial and Nature Wood
The main advantage of trading using opposite ASE Industrial and Nature Wood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASE Industrial position performs unexpectedly, Nature Wood 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 Nature Wood will offset losses from the drop in Nature Wood's long position.| ASE Industrial vs. United Microelectronics | ASE Industrial vs. Amkor Technology | ASE Industrial vs. Himax Technologies | ASE Industrial vs. Chunghwa Telecom Co |
| Nature Wood vs. Entegris | Nature Wood vs. Sun Country Airlines | Nature Wood vs. ASE Industrial Holding | Nature Wood vs. MagnaChip 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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