Correlation Between Asustek Computer and EnTie Commercial

Can any of the company-specific risk be diversified away by investing in both Asustek Computer and EnTie Commercial 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 EnTie Commercial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Asustek Computer and EnTie Commercial Bank, you can compare the effects of market volatilities on Asustek Computer and EnTie Commercial 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 EnTie Commercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asustek Computer and EnTie Commercial.

Diversification Opportunities for Asustek Computer and EnTie Commercial

0.25

Correlation Coefficient

Asustek Computer  EnTie Commercial

Modest diversification

The 3 months correlation between Asustek and EnTie is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Asustek Computer and EnTie Commercial Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EnTie Commercial Bank 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 EnTie Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EnTie Commercial Bank has no effect on the direction of Asustek Computer i.e., Asustek Computer and EnTie Commercial go up and down completely randomly.

Pair Corralation between Asustek Computer and EnTie Commercial

Assuming the 90 days trading horizon Asustek Computer is expected to generate 1.11 times more return on investment than EnTie Commercial. However, Asustek Computer is 1.11 times more volatile than EnTie Commercial Bank. It trades about 0.07 of its potential returns per unit of risk. EnTie Commercial Bank is currently generating about 0.0 per unit of risk. If you would invest  55,000  in Asustek Computer on September 3, 2024 and sell it today you would earn a total of  3,800  from holding Asustek Computer or generate 6.91% return on investment over 90 days.

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

Asustek Computer  vs.  EnTie Commercial Bank

Asustek Computer

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Asustek Computer are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Asustek Computer may actually be approaching a critical reversion point that can send shares even higher in January 2025.

EnTie Commercial Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EnTie Commercial Bank has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, EnTie Commercial is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Asustek Computer and EnTie Commercial

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

The idea behind Asustek Computer and EnTie Commercial Bank 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 Anywhere module to track or share privately all of your investments from the convenience of any device.