Correlation Between ASE Industrial and International CSRC
Can any of the company-specific risk be diversified away by investing in both ASE Industrial and International CSRC 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 ASE Industrial and International CSRC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ASE Industrial Holding and International CSRC Investment, you can compare the effects of market volatilities on ASE Industrial and International CSRC 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 ASE Industrial with a short position of International CSRC. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASE Industrial and International CSRC.
Diversification Opportunities for ASE Industrial and International CSRC
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ASE and International is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding ASE Industrial Holding and International CSRC Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International CSRC and ASE Industrial 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 ASE Industrial Holding are associated (or correlated) with International CSRC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International CSRC has no effect on the direction of ASE Industrial i.e., ASE Industrial and International CSRC go up and down completely randomly.
Pair Corralation between ASE Industrial and International CSRC
Assuming the 90 days trading horizon ASE Industrial Holding is expected to under-perform the International CSRC. In addition to that, ASE Industrial is 1.43 times more volatile than International CSRC Investment. It trades about -0.02 of its total potential returns per unit of risk. International CSRC Investment is currently generating about 0.13 per unit of volatility. If you would invest 1,730 in International CSRC Investment on January 31, 2024 and sell it today you would earn a total of 65.00 from holding International CSRC Investment or generate 3.76% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
ASE Industrial Holding vs. International CSRC Investment
Performance |
Timeline |
ASE Industrial Holding |
International CSRC |
ASE Industrial and International CSRC Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ASE Industrial and International CSRC
The main advantage of trading using opposite ASE Industrial and International CSRC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASE Industrial position performs unexpectedly, International CSRC 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 International CSRC will offset losses from the drop in International CSRC's long position.ASE Industrial vs. Cathay Financial Holding | ASE Industrial vs. Cathay Financial Holding | ASE Industrial vs. Cathay Financial Holding | ASE Industrial vs. Fubon Financial Holding |
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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