Correlation Between ASE Industrial and Elitegroup Computer

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

Diversification Opportunities for ASE Industrial and Elitegroup Computer

0.14

Correlation Coefficient

ASE Industrial  Elitegroup Computer

Average diversification

The 3 months correlation between ASE and Elitegroup is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding ASE Industrial Holding and Elitegroup Computer Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elitegroup Computer 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 Elitegroup Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elitegroup Computer has no effect on the direction of ASE Industrial i.e., ASE Industrial and Elitegroup Computer go up and down completely randomly.

Pair Corralation between ASE Industrial and Elitegroup Computer

Assuming the 90 days trading horizon ASE Industrial Holding is expected to generate 1.07 times more return on investment than Elitegroup Computer. However, ASE Industrial is 1.07 times more volatile than Elitegroup Computer Systems. It trades about 0.01 of its potential returns per unit of risk. Elitegroup Computer Systems is currently generating about -0.05 per unit of risk. If you would invest  15,150  in ASE Industrial Holding on September 3, 2024 and sell it today you would earn a total of  0.00  from holding ASE Industrial Holding or generate 0.0% 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.  Elitegroup Computer Systems

ASE Industrial Holding

Risk-Adjusted Performance

0 of 100

Very Weak

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

Elitegroup Computer

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Elitegroup Computer Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Elitegroup Computer 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 ASE Industrial and Elitegroup Computer

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

The idea behind ASE Industrial Holding and Elitegroup Computer Systems 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.