Correlation Between SWK Holdings and Asm Pacific

Can any of the company-specific risk be diversified away by investing in both SWK Holdings and Asm Pacific 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 SWK Holdings and Asm Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SWK Holdings and Asm Pacific Technology, you can compare the effects of market volatilities on SWK Holdings and Asm Pacific 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 SWK Holdings with a short position of Asm Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of SWK Holdings and Asm Pacific.

Diversification Opportunities for SWK Holdings and Asm Pacific

0.75

Correlation Coefficient

SWK Holdings  Asm Pacific

Poor diversification

The 3 months correlation between SWK and Asm is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding SWK Holdings and Asm Pacific Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asm Pacific Technology and SWK Holdings 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 SWK Holdings are associated (or correlated) with Asm Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asm Pacific Technology has no effect on the direction of SWK Holdings i.e., SWK Holdings and Asm Pacific go up and down completely randomly.

Pair Corralation between SWK Holdings and Asm Pacific

Assuming the 90 days horizon SWK Holdings is expected to generate 10.03 times less return on investment than Asm Pacific. But when comparing it to its historical volatility, SWK Holdings is 7.94 times less risky than Asm Pacific. It trades about 0.17 of its potential returns per unit of risk. Asm Pacific Technology is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  1,978  in Asm Pacific Technology on May 1, 2025 and sell it today you would earn a total of  647.00  from holding Asm Pacific Technology or generate 32.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

SWK Holdings  vs.  Asm Pacific Technology

SWK Holdings

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SWK Holdings are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical indicators, SWK Holdings is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Asm Pacific Technology

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Asm Pacific Technology are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Asm Pacific showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SWK Holdings and Asm Pacific

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

The idea behind SWK Holdings and Asm Pacific Technology 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.