Correlation Between BenQ Materials and Asia Electronic

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

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

Diversification Opportunities for BenQ Materials and Asia Electronic

0.06

Correlation Coefficient

BenQ Materials  Asia Electronic

Significant diversification

The 3 months correlation between BenQ and Asia is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding BenQ Materials Corp and Asia Electronic Material in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Electronic Material and BenQ Materials 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 BenQ Materials Corp are associated (or correlated) with Asia Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Electronic Material has no effect on the direction of BenQ Materials i.e., BenQ Materials and Asia Electronic go up and down completely randomly.

Pair Corralation between BenQ Materials and Asia Electronic

Assuming the 90 days trading horizon BenQ Materials Corp is expected to under-perform the Asia Electronic. In addition to that, BenQ Materials is 1.3 times more volatile than Asia Electronic Material. It trades about -0.18 of its total potential returns per unit of risk. Asia Electronic Material is currently generating about -0.04 per unit of volatility. If you would invest  2,065  in Asia Electronic Material on December 29, 2024 and sell it today you would lose (45.00) from holding Asia Electronic Material or give up 2.18% of portfolio value over 90 days.

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

BenQ Materials Corp  vs.  Asia Electronic Material

BenQ Materials Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days BenQ Materials 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.

Asia Electronic Material

Risk-Adjusted Performance

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.

Pair Trading with BenQ Materials and Asia Electronic

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

The idea behind BenQ Materials Corp and Asia Electronic Material 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.