Correlation Between ASM Pacific and HEALTHCARE TRPFD

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

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

Diversification Opportunities for ASM Pacific and HEALTHCARE TRPFD

0.71

Correlation Coefficient

ASM Pacific  HEALTHCARE TRPFD

Poor diversification

The 3 months correlation between ASM and HEALTHCARE is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding ASM Pacific Technology and HEALTHCARE TRPFD SH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEALTHCARE TRPFD and ASM Pacific 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 ASM Pacific Technology are associated (or correlated) with HEALTHCARE TRPFD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEALTHCARE TRPFD has no effect on the direction of ASM Pacific i.e., ASM Pacific and HEALTHCARE TRPFD go up and down completely randomly.

Pair Corralation between ASM Pacific and HEALTHCARE TRPFD

Assuming the 90 days trading horizon ASM Pacific Technology is expected to generate 1.12 times more return on investment than HEALTHCARE TRPFD. However, ASM Pacific is 1.12 times more volatile than HEALTHCARE TRPFD SH. It trades about 0.17 of its potential returns per unit of risk. HEALTHCARE TRPFD SH is currently generating about 0.13 per unit of risk. If you would invest  549.00  in ASM Pacific Technology on April 23, 2025 and sell it today you would earn a total of  146.00  from holding ASM Pacific Technology or generate 26.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

ASM Pacific Technology  vs.  HEALTHCARE TRPFD SH

ASM Pacific Technology

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ASM Pacific Technology are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ASM Pacific reported solid returns over the last few months and may actually be approaching a breakup point.

HEALTHCARE TRPFD

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HEALTHCARE TRPFD SH are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, HEALTHCARE TRPFD reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ASM Pacific and HEALTHCARE TRPFD

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

The idea behind ASM Pacific Technology and HEALTHCARE TRPFD SH 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.