Correlation Between Highway Holdings and ASE Industrial
Can any of the company-specific risk be diversified away by investing in both Highway Holdings 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 Highway Holdings and ASE Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Highway Holdings Limited and ASE Industrial Holding, you can compare the effects of market volatilities on Highway Holdings 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 Highway Holdings with a short position of ASE Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highway Holdings and ASE Industrial.
Diversification Opportunities for Highway Holdings and ASE Industrial
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Highway and ASE is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Highway Holdings Limited 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 Highway Holdings 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 Highway Holdings Limited 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 Highway Holdings i.e., Highway Holdings and ASE Industrial go up and down completely randomly.
Pair Corralation between Highway Holdings and ASE Industrial
Given the investment horizon of 90 days Highway Holdings Limited is expected to generate 2.22 times more return on investment than ASE Industrial. However, Highway Holdings is 2.22 times more volatile than ASE Industrial Holding. It trades about 0.05 of its potential returns per unit of risk. ASE Industrial Holding is currently generating about 0.06 per unit of risk. If you would invest 181.00 in Highway Holdings Limited on September 3, 2024 and sell it today you would earn a total of 17.00 from holding Highway Holdings Limited or generate 9.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Highway Holdings Limited vs. ASE Industrial Holding
Performance |
| Timeline |
| Highway Holdings |
| ASE Industrial Holding |
Highway Holdings and ASE Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highway Holdings and ASE Industrial
The main advantage of trading using opposite Highway Holdings and ASE Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highway Holdings 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.| Highway Holdings vs. Deswell Industries | Highway Holdings vs. SCOR PK | Highway Holdings vs. HUMANA INC | Highway Holdings vs. Aquagold International |
| 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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