Correlation Between Micro Star and ASRock

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

By analyzing existing cross correlation between Micro Star International Co and ASRock Inc, you can compare the effects of market volatilities on Micro Star and ASRock 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 Micro Star with a short position of ASRock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micro Star and ASRock.

Diversification Opportunities for Micro Star and ASRock

0.3

Correlation Coefficient

Micro Star  ASRock

Weak diversification

The 3 months correlation between Micro and ASRock is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Micro Star International Co and ASRock Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASRock Inc and Micro Star 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 Micro Star International Co are associated (or correlated) with ASRock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASRock Inc has no effect on the direction of Micro Star i.e., Micro Star and ASRock go up and down completely randomly.

Pair Corralation between Micro Star and ASRock

Assuming the 90 days trading horizon Micro Star International Co is expected to generate 0.76 times more return on investment than ASRock. However, Micro Star International Co is 1.32 times less risky than ASRock. It trades about 0.06 of its potential returns per unit of risk. ASRock Inc is currently generating about 0.02 per unit of risk. If you would invest  17,500  in Micro Star International Co on December 4, 2024 and sell it today you would earn a total of  950.00  from holding Micro Star International Co or generate 5.43% return on investment over 90 days.

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

Micro Star International Co  vs.  ASRock Inc

Micro Star Internati

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Micro Star International Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Micro Star may actually be approaching a critical reversion point that can send shares even higher in April 2025.

ASRock Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ASRock Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, ASRock is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Micro Star and ASRock

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

The idea behind Micro Star International Co and ASRock Inc 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.