Correlation Between ASE Industrial and Valens
Can any of the company-specific risk be diversified away by investing in both ASE Industrial and Valens 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 Valens 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 Valens, you can compare the effects of market volatilities on ASE Industrial and Valens 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 Valens. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASE Industrial and Valens.
Diversification Opportunities for ASE Industrial and Valens
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between ASE and Valens is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding ASE Industrial Holding and Valens in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valens 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 Valens. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valens has no effect on the direction of ASE Industrial i.e., ASE Industrial and Valens go up and down completely randomly.
Pair Corralation between ASE Industrial and Valens
Considering the 90-day investment horizon ASE Industrial Holding is expected to under-perform the Valens. But the stock apears to be less risky and, when comparing its historical volatility, ASE Industrial Holding is 2.27 times less risky than Valens. The stock trades about -0.07 of its potential returns per unit of risk. The Valens is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 189.00 in Valens on August 31, 2024 and sell it today you would lose (5.00) from holding Valens or give up 2.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ASE Industrial Holding vs. Valens
Performance |
| Timeline |
| ASE Industrial Holding |
| Valens |
ASE Industrial and Valens Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASE Industrial and Valens
The main advantage of trading using opposite ASE Industrial and Valens positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASE Industrial position performs unexpectedly, Valens 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 Valens will offset losses from the drop in Valens' long position.| ASE Industrial vs. United Microelectronics | ASE Industrial vs. Amkor Technology | ASE Industrial vs. Himax Technologies | ASE Industrial vs. Chunghwa Telecom 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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