Correlation Between Aspeed Technology and Taiwan Mask

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

By analyzing existing cross correlation between Aspeed Technology and Taiwan Mask Corp, you can compare the effects of market volatilities on Aspeed Technology and Taiwan Mask 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 Aspeed Technology with a short position of Taiwan Mask. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aspeed Technology and Taiwan Mask.

Diversification Opportunities for Aspeed Technology and Taiwan Mask

0.51

Correlation Coefficient

Aspeed Technology  Taiwan Mask

Very weak diversification

The 3 months correlation between Aspeed and Taiwan is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Aspeed Technology and Taiwan Mask Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Mask Corp and Aspeed Technology 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 Aspeed Technology are associated (or correlated) with Taiwan Mask. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Mask Corp has no effect on the direction of Aspeed Technology i.e., Aspeed Technology and Taiwan Mask go up and down completely randomly.

Pair Corralation between Aspeed Technology and Taiwan Mask

Assuming the 90 days trading horizon Aspeed Technology is expected to generate 1.52 times more return on investment than Taiwan Mask. However, Aspeed Technology is 1.52 times more volatile than Taiwan Mask Corp. It trades about -0.01 of its potential returns per unit of risk. Taiwan Mask Corp is currently generating about -0.15 per unit of risk. If you would invest  337,000  in Aspeed Technology on December 30, 2024 and sell it today you would lose (15,500) from holding Aspeed Technology or give up 4.6% of portfolio value over 90 days.

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

Aspeed Technology  vs.  Taiwan Mask Corp

Aspeed Technology

Risk-Adjusted Performance

Very Weak

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

Taiwan Mask Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Taiwan Mask Corp 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 April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Aspeed Technology and Taiwan Mask

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

The idea behind Aspeed Technology and Taiwan Mask 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.