Correlation Between Asustek Computer and Feng Ching

Can any of the company-specific risk be diversified away by investing in both Asustek Computer and Feng Ching 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 Asustek Computer and Feng Ching into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Asustek Computer and Feng Ching Metal, you can compare the effects of market volatilities on Asustek Computer and Feng Ching 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 Asustek Computer with a short position of Feng Ching. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asustek Computer and Feng Ching.

Diversification Opportunities for Asustek Computer and Feng Ching

0.23

Correlation Coefficient

Asustek Computer  Feng Ching

Modest diversification

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

Pair Corralation between Asustek Computer and Feng Ching

Assuming the 90 days trading horizon Asustek Computer is expected to generate 4.95 times less return on investment than Feng Ching. But when comparing it to its historical volatility, Asustek Computer is 1.34 times less risky than Feng Ching. It trades about 0.04 of its potential returns per unit of risk. Feng Ching Metal is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1,820  in Feng Ching Metal on December 28, 2024 and sell it today you would earn a total of  455.00  from holding Feng Ching Metal or generate 25.0% return on investment over 90 days.

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

Asustek Computer  vs.  Feng Ching Metal

Asustek Computer

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Asustek Computer are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Asustek Computer is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Feng Ching Metal

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Feng Ching Metal are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Feng Ching showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Asustek Computer and Feng Ching

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

The idea behind Asustek Computer and Feng Ching Metal 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.