Correlation Between Gudeng Precision and ASE Industrial

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

By analyzing existing cross correlation between Gudeng Precision Industrial and ASE Industrial Holding, you can compare the effects of market volatilities on Gudeng Precision and ASE Industrial 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 Gudeng Precision with a short position of ASE Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gudeng Precision and ASE Industrial.

Diversification Opportunities for Gudeng Precision and ASE Industrial

-0.04

Correlation Coefficient

Gudeng Precision  ASE Industrial

Good diversification

The 3 months correlation between Gudeng and ASE is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Gudeng Precision Industrial and ASE Industrial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASE Industrial Holding and Gudeng Precision 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 Gudeng Precision Industrial are associated (or correlated) with ASE Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASE Industrial Holding has no effect on the direction of Gudeng Precision i.e., Gudeng Precision and ASE Industrial go up and down completely randomly.

Pair Corralation between Gudeng Precision and ASE Industrial

Assuming the 90 days trading horizon Gudeng Precision Industrial is expected to generate 1.03 times more return on investment than ASE Industrial. However, Gudeng Precision is 1.03 times more volatile than ASE Industrial Holding. It trades about 0.02 of its potential returns per unit of risk. ASE Industrial Holding is currently generating about 0.02 per unit of risk. If you would invest  46,950  in Gudeng Precision Industrial on October 12, 2024 and sell it today you would earn a total of  2,150  from holding Gudeng Precision Industrial or generate 4.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Gudeng Precision Industrial  vs.  ASE Industrial Holding

Gudeng Precision Ind

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gudeng Precision Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

ASE Industrial Holding

Risk-Adjusted Performance

3 of 100

OK

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 stable basic indicators, ASE Industrial 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 Gudeng Precision and ASE Industrial

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

The idea behind Gudeng Precision Industrial and ASE Industrial Holding 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.