Correlation Between ASE Industrial and Symtek Automation

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

Diversification Opportunities for ASE Industrial and Symtek Automation

0.41

Correlation Coefficient

ASE Industrial  Symtek Automation

Very weak diversification

The 3 months correlation between ASE and Symtek is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding ASE Industrial Holding and Symtek Automation Asia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Symtek Automation Asia 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 Symtek Automation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Symtek Automation Asia has no effect on the direction of ASE Industrial i.e., ASE Industrial and Symtek Automation go up and down completely randomly.

Pair Corralation between ASE Industrial and Symtek Automation

Assuming the 90 days trading horizon ASE Industrial Holding is expected to generate 0.47 times more return on investment than Symtek Automation. However, ASE Industrial Holding is 2.15 times less risky than Symtek Automation. It trades about 0.07 of its potential returns per unit of risk. Symtek Automation Asia is currently generating about -0.08 per unit of risk. If you would invest  15,250  in ASE Industrial Holding on September 13, 2024 and sell it today you would earn a total of  350.00  from holding ASE Industrial Holding or generate 2.3% 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.  Symtek Automation Asia

ASE Industrial Holding

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ASE Industrial Holding are ranked lower than 4 (%) 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.

Symtek Automation Asia

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Symtek Automation Asia are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Symtek Automation showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ASE Industrial and Symtek Automation

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

The idea behind ASE Industrial Holding and Symtek Automation Asia 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.