Correlation Between Asia Electronic and BenQ Materials

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

By analyzing existing cross correlation between Asia Electronic Material and BenQ Materials Corp, you can compare the effects of market volatilities on Asia Electronic and BenQ Materials 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 Asia Electronic with a short position of BenQ Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Electronic and BenQ Materials.

Diversification Opportunities for Asia Electronic and BenQ Materials

-0.59

Correlation Coefficient

Asia Electronic  BenQ Materials

Excellent diversification

The 3 months correlation between Asia and BenQ is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Asia Electronic Material and BenQ Materials Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BenQ Materials Corp and Asia Electronic 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 Asia Electronic Material are associated (or correlated) with BenQ Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BenQ Materials Corp has no effect on the direction of Asia Electronic i.e., Asia Electronic and BenQ Materials go up and down completely randomly.

Pair Corralation between Asia Electronic and BenQ Materials

Assuming the 90 days trading horizon Asia Electronic Material is expected to under-perform the BenQ Materials. In addition to that, Asia Electronic is 1.04 times more volatile than BenQ Materials Corp. It trades about -0.02 of its total potential returns per unit of risk. BenQ Materials Corp is currently generating about 0.05 per unit of volatility. If you would invest  3,050  in BenQ Materials Corp on September 13, 2024 and sell it today you would earn a total of  155.00  from holding BenQ Materials Corp or generate 5.08% return on investment over 90 days.

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

Asia Electronic Material  vs.  BenQ Materials Corp

Asia Electronic Material

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asia Electronic Material has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Asia Electronic is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

BenQ Materials Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BenQ Materials Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, BenQ Materials 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 Asia Electronic and BenQ Materials

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

The idea behind Asia Electronic Material and BenQ Materials Corp 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.