Correlation Between HE Equipment and ASE Industrial
Can any of the company-specific risk be diversified away by investing in both HE Equipment 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 HE Equipment and ASE Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HE Equipment Services and ASE Industrial Holding, you can compare the effects of market volatilities on HE Equipment 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 HE Equipment with a short position of ASE Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of HE Equipment and ASE Industrial.
Diversification Opportunities for HE Equipment and ASE Industrial
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between HEES and ASE is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding HE Equipment Services 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 HE Equipment 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 HE Equipment Services 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 HE Equipment i.e., HE Equipment and ASE Industrial go up and down completely randomly.
Pair Corralation between HE Equipment and ASE Industrial
Given the investment horizon of 90 days HE Equipment Services is expected to under-perform the ASE Industrial. In addition to that, HE Equipment is 1.15 times more volatile than ASE Industrial Holding. It trades about -0.11 of its total potential returns per unit of risk. ASE Industrial Holding is currently generating about 0.04 per unit of volatility. If you would invest 969.00 in ASE Industrial Holding on September 12, 2024 and sell it today you would earn a total of 12.00 from holding ASE Industrial Holding or generate 1.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HE Equipment Services vs. ASE Industrial Holding
Performance |
| Timeline |
| HE Equipment Services |
| ASE Industrial Holding |
HE Equipment and ASE Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HE Equipment and ASE Industrial
The main advantage of trading using opposite HE Equipment and ASE Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HE Equipment 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.| HE Equipment vs. GATX Corporation | HE Equipment vs. McGrath RentCorp | HE Equipment vs. Alta Equipment Group | HE Equipment vs. Ryder System |
| ASE Industrial vs. NVIDIA | ASE Industrial vs. Taiwan Semiconductor Manufacturing | ASE Industrial vs. Micron Technology | ASE Industrial vs. Qualcomm Incorporated |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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