Correlation Between Aspeed Technology and Cheng Uei

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

By analyzing existing cross correlation between Aspeed Technology and Cheng Uei Precision, you can compare the effects of market volatilities on Aspeed Technology and Cheng Uei 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 Cheng Uei. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aspeed Technology and Cheng Uei.

Diversification Opportunities for Aspeed Technology and Cheng Uei

0.71

Correlation Coefficient

Aspeed Technology  Cheng Uei

Poor diversification

The 3 months correlation between Aspeed and Cheng is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Aspeed Technology and Cheng Uei Precision in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheng Uei Precision 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 Cheng Uei. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheng Uei Precision has no effect on the direction of Aspeed Technology i.e., Aspeed Technology and Cheng Uei go up and down completely randomly.

Pair Corralation between Aspeed Technology and Cheng Uei

Assuming the 90 days trading horizon Aspeed Technology is expected to generate 1.33 times less return on investment than Cheng Uei. In addition to that, Aspeed Technology is 1.38 times more volatile than Cheng Uei Precision. It trades about 0.04 of its total potential returns per unit of risk. Cheng Uei Precision is currently generating about 0.07 per unit of volatility. If you would invest  3,683  in Cheng Uei Precision on December 3, 2024 and sell it today you would earn a total of  3,317  from holding Cheng Uei Precision or generate 90.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.79%
Values	Daily Returns

Aspeed Technology  vs.  Cheng Uei Precision

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 latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Cheng Uei Precision

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cheng Uei Precision has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Aspeed Technology and Cheng Uei

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

The idea behind Aspeed Technology and Cheng Uei Precision 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.