Correlation Between ASE Industrial and DIH Holding

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

Diversification Opportunities for ASE Industrial and DIH Holding

0.28

Correlation Coefficient

ASE Industrial  DIH Holding

Modest diversification

The 3 months correlation between ASE and DIH is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding ASE Industrial Holding and DIH Holding US, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DIH Holding US, 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 DIH Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DIH Holding US, has no effect on the direction of ASE Industrial i.e., ASE Industrial and DIH Holding go up and down completely randomly.

Pair Corralation between ASE Industrial and DIH Holding

Considering the 90-day investment horizon ASE Industrial is expected to generate 27.82 times less return on investment than DIH Holding. But when comparing it to its historical volatility, ASE Industrial Holding is 11.14 times less risky than DIH Holding. It trades about 0.05 of its potential returns per unit of risk. DIH Holding US, is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1.24  in DIH Holding US, on September 12, 2024 and sell it today you would earn a total of  3.65  from holding DIH Holding US, or generate 294.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	40.34%
Values	Daily Returns

ASE Industrial Holding  vs.  DIH Holding US,

ASE Industrial Holding

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ASE Industrial Holding are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, ASE Industrial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

DIH Holding US,

Risk-Adjusted Performance

7 of 100

OK

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

Pair Trading with ASE Industrial and DIH Holding

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

The idea behind ASE Industrial Holding and DIH Holding US, 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.