Correlation Between Asustek Computer and China Steel
Can any of the company-specific risk be diversified away by investing in both Asustek Computer and China Steel 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 Asustek Computer and China Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asustek Computer and China Steel Structure, you can compare the effects of market volatilities on Asustek Computer and China Steel 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 Asustek Computer with a short position of China Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asustek Computer and China Steel.
Diversification Opportunities for Asustek Computer and China Steel
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Asustek and China is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Asustek Computer and China Steel Structure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Steel Structure and Asustek Computer 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 Asustek Computer are associated (or correlated) with China Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Steel Structure has no effect on the direction of Asustek Computer i.e., Asustek Computer and China Steel go up and down completely randomly.
Pair Corralation between Asustek Computer and China Steel
Assuming the 90 days trading horizon Asustek Computer is expected to generate 1.93 times more return on investment than China Steel. However, Asustek Computer is 1.93 times more volatile than China Steel Structure. It trades about 0.06 of its potential returns per unit of risk. China Steel Structure is currently generating about -0.1 per unit of risk. If you would invest 58,600 in Asustek Computer on September 25, 2024 and sell it today you would earn a total of 2,900 from holding Asustek Computer or generate 4.95% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Asustek Computer vs. China Steel Structure
Performance |
Timeline |
Asustek Computer |
China Steel Structure |
Asustek Computer and China Steel Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Asustek Computer and China Steel
The main advantage of trading using opposite Asustek Computer and China Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asustek Computer position performs unexpectedly, China Steel 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 China Steel will offset losses from the drop in China Steel's long position.Asustek Computer vs. Century Wind Power | Asustek Computer vs. Green World Fintech | Asustek Computer vs. Ingentec | Asustek Computer vs. Chaheng Precision Co |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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