Correlation Between Asm Pacific and AIXTRON SE

Can any of the company-specific risk be diversified away by investing in both Asm Pacific and AIXTRON SE 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 Asm Pacific and AIXTRON SE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Asm Pacific Technology and AIXTRON SE, you can compare the effects of market volatilities on Asm Pacific and AIXTRON SE 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 Asm Pacific with a short position of AIXTRON SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asm Pacific and AIXTRON SE.

Diversification Opportunities for Asm Pacific and AIXTRON SE

0.45

Correlation Coefficient

Asm Pacific  AIXTRON SE

Very weak diversification

The 3 months correlation between Asm and AIXTRON is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Asm Pacific Technology and AIXTRON SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIXTRON SE and Asm Pacific 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 Asm Pacific Technology are associated (or correlated) with AIXTRON SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIXTRON SE has no effect on the direction of Asm Pacific i.e., Asm Pacific and AIXTRON SE go up and down completely randomly.

Pair Corralation between Asm Pacific and AIXTRON SE

Assuming the 90 days horizon Asm Pacific Technology is expected to under-perform the AIXTRON SE. But the pink sheet apears to be less risky and, when comparing its historical volatility, Asm Pacific Technology is 1.22 times less risky than AIXTRON SE. The pink sheet trades about -0.24 of its potential returns per unit of risk. The AIXTRON SE is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest  1,761  in AIXTRON SE on September 4, 2024 and sell it today you would lose (312.00) from holding AIXTRON SE or give up 17.72% of portfolio value over 90 days.

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

Asm Pacific Technology  vs.  AIXTRON SE

Asm Pacific Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asm Pacific Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

AIXTRON SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AIXTRON SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Asm Pacific and AIXTRON SE

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

The idea behind Asm Pacific Technology and AIXTRON SE 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.