Correlation Between Asm Pacific and Lasertec

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

Diversification Opportunities for Asm Pacific and Lasertec

0.5

Correlation Coefficient

Asm Pacific  Lasertec

Very weak diversification

The 3 months correlation between Asm and Lasertec is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Asm Pacific Technology and Lasertec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lasertec 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 Lasertec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lasertec has no effect on the direction of Asm Pacific i.e., Asm Pacific and Lasertec go up and down completely randomly.

Pair Corralation between Asm Pacific and Lasertec

Assuming the 90 days horizon Asm Pacific Technology is expected to generate 0.96 times more return on investment than Lasertec. However, Asm Pacific Technology is 1.04 times less risky than Lasertec. It trades about -0.06 of its potential returns per unit of risk. Lasertec is currently generating about -0.26 per unit of risk. If you would invest  3,405  in Asm Pacific Technology on September 2, 2024 and sell it today you would lose (386.00) from holding Asm Pacific Technology or give up 11.34% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Asm Pacific Technology  vs.  Lasertec

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.

Lasertec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lasertec has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Asm Pacific and Lasertec

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

The idea behind Asm Pacific Technology and Lasertec 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.