Correlation Between ASE Industrial and Texas Instruments

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

Diversification Opportunities for ASE Industrial and Texas Instruments

0.86

Correlation Coefficient

ASE Industrial  Texas Instruments

Very poor diversification

The 3 months correlation between ASE and Texas is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding ASE Industrial Holding and Texas Instruments Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Texas Instruments 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 Texas Instruments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Texas Instruments has no effect on the direction of ASE Industrial i.e., ASE Industrial and Texas Instruments go up and down completely randomly.

Pair Corralation between ASE Industrial and Texas Instruments

Considering the 90-day investment horizon ASE Industrial Holding is expected to under-perform the Texas Instruments. But the stock apears to be less risky and, when comparing its historical volatility, ASE Industrial Holding is 1.07 times less risky than Texas Instruments. The stock trades about -0.16 of its potential returns per unit of risk. The Texas Instruments Incorporated is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  18,080  in Texas Instruments Incorporated on January 14, 2025 and sell it today you would lose (2,982) from holding Texas Instruments Incorporated or give up 16.49% of portfolio value over 90 days.

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

ASE Industrial Holding  vs.  Texas Instruments Incorporated

ASE Industrial Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days ASE Industrial Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in May 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Texas Instruments

Risk-Adjusted Performance

Very Weak

Over the last 90 days Texas Instruments Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in May 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with ASE Industrial and Texas Instruments

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

The idea behind ASE Industrial Holding and Texas Instruments Incorporated 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.

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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.