Correlation Between Axalta Coating and ASE Industrial
Can any of the company-specific risk be diversified away by investing in both Axalta Coating and ASE Industrial 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 Axalta Coating and ASE Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axalta Coating Systems and ASE Industrial Holding, you can compare the effects of market volatilities on Axalta Coating and ASE Industrial 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 Axalta Coating with a short position of ASE Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axalta Coating and ASE Industrial.
Diversification Opportunities for Axalta Coating and ASE Industrial
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Axalta and ASE is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Axalta Coating Systems and ASE Industrial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASE Industrial Holding and Axalta Coating 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 Axalta Coating Systems are associated (or correlated) with ASE Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASE Industrial Holding has no effect on the direction of Axalta Coating i.e., Axalta Coating and ASE Industrial go up and down completely randomly.
Pair Corralation between Axalta Coating and ASE Industrial
Given the investment horizon of 90 days Axalta Coating Systems is expected to generate 0.68 times more return on investment than ASE Industrial. However, Axalta Coating Systems is 1.47 times less risky than ASE Industrial. It trades about 0.07 of its potential returns per unit of risk. ASE Industrial Holding is currently generating about -0.01 per unit of risk. If you would invest 3,567 in Axalta Coating Systems on September 2, 2024 and sell it today you would earn a total of 479.00 from holding Axalta Coating Systems or generate 13.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Axalta Coating Systems vs. ASE Industrial Holding
Performance |
| Timeline |
| Axalta Coating Systems |
| ASE Industrial Holding |
Axalta Coating and ASE Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axalta Coating and ASE Industrial
The main advantage of trading using opposite Axalta Coating and ASE Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axalta Coating position performs unexpectedly, ASE Industrial 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 ASE Industrial will offset losses from the drop in ASE Industrial's long position.| Axalta Coating vs. Linde plc Ordinary | Axalta Coating vs. Air Products and | Axalta Coating vs. Aquagold International | Axalta Coating vs. Thrivent High Yield |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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