Correlation Between Semtech and ASE Industrial
Can any of the company-specific risk be diversified away by investing in both Semtech 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 Semtech and ASE Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Semtech and ASE Industrial Holding, you can compare the effects of market volatilities on Semtech 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 Semtech with a short position of ASE Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Semtech and ASE Industrial.
Diversification Opportunities for Semtech and ASE Industrial
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Semtech and ASE is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Semtech 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 Semtech 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 Semtech 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 Semtech i.e., Semtech and ASE Industrial go up and down completely randomly.
Pair Corralation between Semtech and ASE Industrial
Given the investment horizon of 90 days Semtech is expected to generate 2.34 times more return on investment than ASE Industrial. However, Semtech is 2.34 times more volatile than ASE Industrial Holding. It trades about 0.09 of its potential returns per unit of risk. ASE Industrial Holding is currently generating about 0.04 per unit of risk. If you would invest 6,210 in Semtech on November 3, 2024 and sell it today you would earn a total of 486.00 from holding Semtech or generate 7.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Semtech vs. ASE Industrial Holding
Performance |
| Timeline |
| Semtech |
| ASE Industrial Holding |
Semtech and ASE Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Semtech and ASE Industrial
The main advantage of trading using opposite Semtech and ASE Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Semtech 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.| Semtech vs. Power Integrations | Semtech vs. Diodes Incorporated | Semtech vs. MACOM Technology Solutions | Semtech vs. Cirrus Logic |
| ASE Industrial vs. First Solar | ASE Industrial vs. Sunrun Inc | ASE Industrial vs. Canadian Solar | ASE Industrial vs. SolarEdge Technologies |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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