Correlation Between WESTERN DIGITAL and ASM Pacific

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

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

Diversification Opportunities for WESTERN DIGITAL and ASM Pacific

0.39

Correlation Coefficient

WESTERN DIGITAL  ASM Pacific

Weak diversification

The 3 months correlation between WESTERN and ASM is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding WESTERN DIGITAL 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 WESTERN DIGITAL 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 WESTERN DIGITAL 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 WESTERN DIGITAL i.e., WESTERN DIGITAL and ASM Pacific go up and down completely randomly.

Pair Corralation between WESTERN DIGITAL and ASM Pacific

Assuming the 90 days trading horizon WESTERN DIGITAL is expected to generate 0.83 times more return on investment than ASM Pacific. However, WESTERN DIGITAL is 1.21 times less risky than ASM Pacific. It trades about 0.47 of its potential returns per unit of risk. ASM Pacific Technology is currently generating about 0.17 per unit of risk. If you would invest  3,319  in WESTERN DIGITAL on April 23, 2025 and sell it today you would earn a total of  2,553  from holding WESTERN DIGITAL or generate 76.92% return on investment over 90 days.

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

WESTERN DIGITAL  vs.  ASM Pacific Technology

WESTERN DIGITAL

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in WESTERN DIGITAL are ranked lower than 36 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, WESTERN DIGITAL exhibited solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with WESTERN DIGITAL and ASM Pacific

The main advantage of trading using opposite WESTERN DIGITAL and ASM Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WESTERN DIGITAL 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 WESTERN DIGITAL 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.