Correlation Between ASE Industrial and Taiwan FamilyMart

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

Diversification Opportunities for ASE Industrial and Taiwan FamilyMart

-0.42

Correlation Coefficient

ASE Industrial  Taiwan FamilyMart

Very good diversification

The 3 months correlation between ASE and Taiwan is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding ASE Industrial Holding and Taiwan FamilyMart Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan FamilyMart 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 Taiwan FamilyMart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan FamilyMart has no effect on the direction of ASE Industrial i.e., ASE Industrial and Taiwan FamilyMart go up and down completely randomly.

Pair Corralation between ASE Industrial and Taiwan FamilyMart

Assuming the 90 days trading horizon ASE Industrial Holding is expected to generate 3.26 times more return on investment than Taiwan FamilyMart. However, ASE Industrial is 3.26 times more volatile than Taiwan FamilyMart Co. It trades about 0.06 of its potential returns per unit of risk. Taiwan FamilyMart Co is currently generating about 0.0 per unit of risk. If you would invest  10,300  in ASE Industrial Holding on October 24, 2024 and sell it today you would earn a total of  6,900  from holding ASE Industrial Holding or generate 66.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

ASE Industrial Holding  vs.  Taiwan FamilyMart Co

ASE Industrial Holding

Risk-Adjusted Performance

6 of 100

Modest

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

Taiwan FamilyMart

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Taiwan FamilyMart Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Taiwan FamilyMart 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 ASE Industrial and Taiwan FamilyMart

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

The idea behind ASE Industrial Holding and Taiwan FamilyMart 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.

Check out your portfolio center.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.