Correlation Between ASE Industrial and Globavend Holdings

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

Diversification Opportunities for ASE Industrial and Globavend Holdings

0.23

Correlation Coefficient

ASE Industrial  Globavend Holdings

Modest diversification

The 3 months correlation between ASE and Globavend is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding ASE Industrial Holding and Globavend Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globavend Holdings 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 Globavend Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globavend Holdings has no effect on the direction of ASE Industrial i.e., ASE Industrial and Globavend Holdings go up and down completely randomly.

Pair Corralation between ASE Industrial and Globavend Holdings

Considering the 90-day investment horizon ASE Industrial is expected to generate 1.04 times less return on investment than Globavend Holdings. But when comparing it to its historical volatility, ASE Industrial Holding is 2.64 times less risky than Globavend Holdings. It trades about 0.05 of its potential returns per unit of risk. Globavend Holdings Limited is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  71.00  in Globavend Holdings Limited on September 12, 2024 and sell it today you would lose (1.75) from holding Globavend Holdings Limited or give up 2.46% of portfolio value over 90 days.

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

ASE Industrial Holding  vs.  Globavend Holdings Limited

ASE Industrial Holding

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ASE Industrial Holding are ranked lower than 3 (%) 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 latest stock price disturbance, may contribute to short-term losses for the investors.

Globavend Holdings

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Globavend Holdings Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Globavend Holdings is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with ASE Industrial and Globavend Holdings

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

The idea behind ASE Industrial Holding and Globavend Holdings Limited 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 Transaction History module to view history of all your transactions and understand their impact on performance.