Correlation Between ASE Industrial and Origin Materials
Can any of the company-specific risk be diversified away by investing in both ASE Industrial and Origin Materials 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 Origin Materials 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 Origin Materials, you can compare the effects of market volatilities on ASE Industrial and Origin Materials 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 Origin Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASE Industrial and Origin Materials.
Diversification Opportunities for ASE Industrial and Origin Materials
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between ASE and Origin is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding ASE Industrial Holding and Origin Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Materials 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 Origin Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Origin Materials has no effect on the direction of ASE Industrial i.e., ASE Industrial and Origin Materials go up and down completely randomly.
Pair Corralation between ASE Industrial and Origin Materials
Considering the 90-day investment horizon ASE Industrial Holding is expected to generate 0.4 times more return on investment than Origin Materials. However, ASE Industrial Holding is 2.48 times less risky than Origin Materials. It trades about -0.07 of its potential returns per unit of risk. Origin Materials is currently generating about -0.1 per unit of risk. If you would invest 980.00 in ASE Industrial Holding on August 31, 2024 and sell it today you would lose (31.00) from holding ASE Industrial Holding or give up 3.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ASE Industrial Holding vs. Origin Materials
Performance |
| Timeline |
| ASE Industrial Holding |
| Origin Materials |
ASE Industrial and Origin Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASE Industrial and Origin Materials
The main advantage of trading using opposite ASE Industrial and Origin Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASE Industrial position performs unexpectedly, Origin Materials 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 Origin Materials will offset losses from the drop in Origin Materials' long position.| ASE Industrial vs. United Microelectronics | ASE Industrial vs. Amkor Technology | ASE Industrial vs. Himax Technologies | ASE Industrial vs. Chunghwa Telecom Co |
| Origin Materials vs. Tronox Holdings PLC | Origin Materials vs. Valhi Inc | Origin Materials vs. Lsb Industries | Origin Materials vs. Huntsman |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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