Correlation Between ASE Industrial and Apple

Can any of the company-specific risk be diversified away by investing in both ASE Industrial and Apple 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 Apple 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 Apple Inc, you can compare the effects of market volatilities on ASE Industrial and Apple 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 Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASE Industrial and Apple.

Diversification Opportunities for ASE Industrial and Apple

0.73

Correlation Coefficient

ASE Industrial  Apple

Poor diversification

The 3 months correlation between ASE and Apple is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding ASE Industrial Holding and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of ASE Industrial i.e., ASE Industrial and Apple go up and down completely randomly.

Pair Corralation between ASE Industrial and Apple

Considering the 90-day investment horizon ASE Industrial Holding is expected to generate 1.48 times more return on investment than Apple. However, ASE Industrial is 1.48 times more volatile than Apple Inc. It trades about 0.06 of its potential returns per unit of risk. Apple Inc is currently generating about 0.07 per unit of risk. If you would invest  569.00  in ASE Industrial Holding on August 11, 2024 and sell it today you would earn a total of  419.00  from holding ASE Industrial Holding or generate 73.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

ASE Industrial Holding  vs.  Apple Inc

ASE Industrial Holding

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ASE Industrial Holding are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, ASE Industrial may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Apple Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Apple is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with ASE Industrial and Apple

The main advantage of trading using opposite ASE Industrial and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASE Industrial position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.

The idea behind ASE Industrial Holding and Apple Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.