Correlation Between ASE Industrial and Advanced Micro
Can any of the company-specific risk be diversified away by investing in both ASE Industrial and Advanced Micro 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 Advanced Micro 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 Advanced Micro Devices, you can compare the effects of market volatilities on ASE Industrial and Advanced Micro 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 Advanced Micro. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASE Industrial and Advanced Micro.
Diversification Opportunities for ASE Industrial and Advanced Micro
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between ASE and Advanced is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding ASE Industrial Holding and Advanced Micro Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Micro Devices 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 Advanced Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Micro Devices has no effect on the direction of ASE Industrial i.e., ASE Industrial and Advanced Micro go up and down completely randomly.
Pair Corralation between ASE Industrial and Advanced Micro
Considering the 90-day investment horizon ASE Industrial Holding is expected to generate 0.53 times more return on investment than Advanced Micro. However, ASE Industrial Holding is 1.88 times less risky than Advanced Micro. It trades about -0.36 of its potential returns per unit of risk. Advanced Micro Devices is currently generating about -0.3 per unit of risk. If you would invest 1,135 in ASE Industrial Holding on January 21, 2024 and sell it today you would lose (130.00) from holding ASE Industrial Holding or give up 11.45% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
ASE Industrial Holding vs. Advanced Micro Devices
Performance |
Timeline |
ASE Industrial Holding |
Advanced Micro Devices |
ASE Industrial and Advanced Micro Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ASE Industrial and Advanced Micro
The main advantage of trading using opposite ASE Industrial and Advanced Micro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASE Industrial position performs unexpectedly, Advanced Micro 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 Advanced Micro will offset losses from the drop in Advanced Micro's long position.ASE Industrial vs. United Microelectronics | ASE Industrial vs. Amkor Technology | ASE Industrial vs. Himax Technologies | ASE Industrial vs. Chunghwa Telecom Co |
Advanced Micro vs. Taiwan Semiconductor Manufacturing | Advanced Micro vs. Intel | Advanced Micro vs. Marvell Technology Group | Advanced Micro vs. Micron Technology |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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