Correlation Between ASE Industrial and Eastech Holding

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

Diversification Opportunities for ASE Industrial and Eastech Holding

0.22

Correlation Coefficient

ASE Industrial  Eastech Holding

Modest diversification

The 3 months correlation between ASE and Eastech is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding ASE Industrial Holding and Eastech Holding Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastech Holding 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 Eastech Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastech Holding has no effect on the direction of ASE Industrial i.e., ASE Industrial and Eastech Holding go up and down completely randomly.

Pair Corralation between ASE Industrial and Eastech Holding

Assuming the 90 days trading horizon ASE Industrial is expected to generate 3.49 times less return on investment than Eastech Holding. In addition to that, ASE Industrial is 1.57 times more volatile than Eastech Holding Limited. It trades about 0.01 of its total potential returns per unit of risk. Eastech Holding Limited is currently generating about 0.08 per unit of volatility. If you would invest  13,050  in Eastech Holding Limited on December 22, 2024 and sell it today you would earn a total of  800.00  from holding Eastech Holding Limited or generate 6.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.25%
Values	Daily Returns

ASE Industrial Holding  vs.  Eastech Holding Limited

ASE Industrial Holding

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ASE Industrial Holding are ranked lower than 1 (%) 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.

Eastech Holding

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Eastech Holding Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Eastech Holding may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with ASE Industrial and Eastech Holding

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

The idea behind ASE Industrial Holding and Eastech Holding 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.