Correlation Between ASE Industrial and Syscom Computer

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

Diversification Opportunities for ASE Industrial and Syscom Computer

0.56

Correlation Coefficient

ASE Industrial  Syscom Computer

Very weak diversification

The 3 months correlation between ASE and Syscom is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding ASE Industrial Holding and Syscom Computer Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Syscom Computer Engi 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 Syscom Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Syscom Computer Engi has no effect on the direction of ASE Industrial i.e., ASE Industrial and Syscom Computer go up and down completely randomly.

Pair Corralation between ASE Industrial and Syscom Computer

Assuming the 90 days trading horizon ASE Industrial is expected to generate 1.86 times less return on investment than Syscom Computer. But when comparing it to its historical volatility, ASE Industrial Holding is 1.3 times less risky than Syscom Computer. It trades about 0.07 of its potential returns per unit of risk. Syscom Computer Engineering is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  5,240  in Syscom Computer Engineering on September 12, 2024 and sell it today you would earn a total of  730.00  from holding Syscom Computer Engineering or generate 13.93% return on investment over 90 days.

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

ASE Industrial Holding  vs.  Syscom Computer Engineering

ASE Industrial Holding

Risk-Adjusted Performance

5 of 100

OK

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

Syscom Computer Engi

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Syscom Computer Engineering are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Syscom Computer showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ASE Industrial and Syscom Computer

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

The idea behind ASE Industrial Holding and Syscom Computer Engineering 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.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.