Correlation Between Globalfoundries and ASE Industrial
Can any of the company-specific risk be diversified away by investing in both Globalfoundries 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 Globalfoundries and ASE Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Globalfoundries and ASE Industrial Holding, you can compare the effects of market volatilities on Globalfoundries 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 Globalfoundries with a short position of ASE Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globalfoundries and ASE Industrial.
Diversification Opportunities for Globalfoundries and ASE Industrial
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Globalfoundries and ASE is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Globalfoundries 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 Globalfoundries 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 Globalfoundries 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 Globalfoundries i.e., Globalfoundries and ASE Industrial go up and down completely randomly.
Pair Corralation between Globalfoundries and ASE Industrial
Considering the 90-day investment horizon Globalfoundries is expected to generate 2.6 times more return on investment than ASE Industrial. However, Globalfoundries is 2.6 times more volatile than ASE Industrial Holding. It trades about 0.22 of its potential returns per unit of risk. ASE Industrial Holding is currently generating about 0.08 per unit of risk. If you would invest 3,601 in Globalfoundries on September 5, 2024 and sell it today you would earn a total of 837.00 from holding Globalfoundries or generate 23.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Globalfoundries vs. ASE Industrial Holding
Performance |
| Timeline |
| Globalfoundries |
| ASE Industrial Holding |
Globalfoundries and ASE Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Globalfoundries and ASE Industrial
The main advantage of trading using opposite Globalfoundries and ASE Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globalfoundries 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.| Globalfoundries vs. NXP Semiconductors NV | Globalfoundries vs. Analog Devices | Globalfoundries vs. ON Semiconductor | Globalfoundries vs. Lattice Semiconductor |
| ASE Industrial vs. NXP Semiconductors NV | ASE Industrial vs. Monolithic Power Systems | ASE Industrial vs. ON Semiconductor | ASE Industrial vs. GSI Technology |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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