Correlation Between ASE Industrial and MaxLinear

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

Diversification Opportunities for ASE Industrial and MaxLinear

0.07

Correlation Coefficient

ASE Industrial  MaxLinear

Significant diversification

The 3 months correlation between ASE and MaxLinear is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding ASE Industrial Holding and MaxLinear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MaxLinear 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 MaxLinear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MaxLinear has no effect on the direction of ASE Industrial i.e., ASE Industrial and MaxLinear go up and down completely randomly.

Pair Corralation between ASE Industrial and MaxLinear

Considering the 90-day investment horizon ASE Industrial Holding is expected to under-perform the MaxLinear. But the stock apears to be less risky and, when comparing its historical volatility, ASE Industrial Holding is 2.0 times less risky than MaxLinear. The stock trades about -0.2 of its potential returns per unit of risk. The MaxLinear is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  1,816  in MaxLinear on January 25, 2024 and sell it today you would earn a total of  262.00  from holding MaxLinear or generate 14.43% return on investment over 90 days.

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

ASE Industrial Holding  vs.  MaxLinear

ASE Industrial Holding

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ASE Industrial Holding are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, ASE Industrial may actually be approaching a critical reversion point that can send shares even higher in May 2024.

MaxLinear

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MaxLinear has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with ASE Industrial and MaxLinear

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

The idea behind ASE Industrial Holding and MaxLinear 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.