Correlation Between ASE Industrial and PS Business
Can any of the company-specific risk be diversified away by investing in both ASE Industrial and PS Business 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 PS Business 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 PS Business Parks, you can compare the effects of market volatilities on ASE Industrial and PS Business 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 PS Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASE Industrial and PS Business.
Diversification Opportunities for ASE Industrial and PS Business
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ASE and PSBZP is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding ASE Industrial Holding and PS Business Parks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PS Business Parks 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 PS Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PS Business Parks has no effect on the direction of ASE Industrial i.e., ASE Industrial and PS Business go up and down completely randomly.
Pair Corralation between ASE Industrial and PS Business
Considering the 90-day investment horizon ASE Industrial is expected to generate 1.77 times less return on investment than PS Business. But when comparing it to its historical volatility, ASE Industrial Holding is 1.57 times less risky than PS Business. It trades about 0.06 of its potential returns per unit of risk. PS Business Parks is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,106 in PS Business Parks on October 25, 2024 and sell it today you would earn a total of 229.00 from holding PS Business Parks or generate 20.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 23.73% |
| Values | Daily Returns |
ASE Industrial Holding vs. PS Business Parks
Performance |
| Timeline |
| ASE Industrial Holding |
| PS Business Parks |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
ASE Industrial and PS Business Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASE Industrial and PS Business
The main advantage of trading using opposite ASE Industrial and PS Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASE Industrial position performs unexpectedly, PS Business 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 PS Business will offset losses from the drop in PS Business' long position.| ASE Industrial vs. United Microelectronics | ASE Industrial vs. Amkor Technology | ASE Industrial vs. Himax Technologies | ASE Industrial vs. Chunghwa Telecom Co |
| PS Business vs. NL Industries | PS Business vs. Skechers USA | PS Business vs. Victorias Secret Co | PS Business vs. Chemours 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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