Correlation Between Cars and ASE Industrial
Can any of the company-specific risk be diversified away by investing in both Cars 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 Cars and ASE Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cars Inc and ASE Industrial Holding, you can compare the effects of market volatilities on Cars 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 Cars with a short position of ASE Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cars and ASE Industrial.
Diversification Opportunities for Cars and ASE Industrial
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cars and ASE is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Cars Inc 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 Cars 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 Cars Inc 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 Cars i.e., Cars and ASE Industrial go up and down completely randomly.
Pair Corralation between Cars and ASE Industrial
Given the investment horizon of 90 days Cars is expected to generate 1.2 times less return on investment than ASE Industrial. In addition to that, Cars is 1.11 times more volatile than ASE Industrial Holding. It trades about 0.04 of its total potential returns per unit of risk. ASE Industrial Holding is currently generating about 0.06 per unit of volatility. 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cars Inc vs. ASE Industrial Holding
Performance |
| Timeline |
| Cars Inc |
| ASE Industrial Holding |
Cars and ASE Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cars and ASE Industrial
The main advantage of trading using opposite Cars and ASE Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cars 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.The idea behind Cars Inc and ASE Industrial Holding pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 CEOs Directory module to screen CEOs from public companies around the world.
Other Complementary Tools
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |