Correlation Between ASRock and Micro Star

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

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

Diversification Opportunities for ASRock and Micro Star

-0.14

Correlation Coefficient

ASRock  Micro Star

Good diversification

The 3 months correlation between ASRock and Micro is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding ASRock Inc and Micro Star International Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micro Star Internati and ASRock 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 ASRock Inc are associated (or correlated) with Micro Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Micro Star Internati has no effect on the direction of ASRock i.e., ASRock and Micro Star go up and down completely randomly.

Pair Corralation between ASRock and Micro Star

Assuming the 90 days trading horizon ASRock Inc is expected to generate 1.62 times more return on investment than Micro Star. However, ASRock is 1.62 times more volatile than Micro Star International Co. It trades about 0.13 of its potential returns per unit of risk. Micro Star International Co is currently generating about 0.0 per unit of risk. If you would invest  20,450  in ASRock Inc on September 15, 2024 and sell it today you would earn a total of  4,150  from holding ASRock Inc or generate 20.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

ASRock Inc  vs.  Micro Star International Co

ASRock Inc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ASRock Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, ASRock showed solid returns over the last few months and may actually be approaching a breakup point.

Micro Star Internati

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Micro Star International Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Micro Star 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 ASRock and Micro Star

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

The idea behind ASRock Inc and Micro Star International Co 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.