Correlation Between Semtech and ASE Industrial

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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

0.91
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Semtech and ASE is 0.91. 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 1.53 times more return on investment than ASE Industrial. However, Semtech is 1.53 times more volatile than ASE Industrial Holding. It trades about 0.21 of its potential returns per unit of risk. ASE Industrial Holding is currently generating about 0.11 per unit of risk. If you would invest  3,466  in Semtech on May 3, 2025 and sell it today you would earn a total of  1,644  from holding Semtech or generate 47.43% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Semtech  vs.  ASE Industrial Holding

 Performance 
       Timeline  
Semtech 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Semtech are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Semtech exhibited solid returns over the last few months and may actually be approaching a breakup point.
ASE Industrial Holding 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in ASE Industrial Holding are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, ASE Industrial showed solid returns over the last few months and may actually be approaching a breakup point.

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.
The idea behind Semtech and ASE Industrial Holding 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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