Correlation Between ASM International and Advantest Corp

Can any of the company-specific risk be diversified away by investing in both ASM International and Advantest Corp 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 ASM International and Advantest Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ASM International NV and Advantest Corp DRC, you can compare the effects of market volatilities on ASM International and Advantest Corp 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 ASM International with a short position of Advantest Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASM International and Advantest Corp.

Diversification Opportunities for ASM International and Advantest Corp

-0.24

Correlation Coefficient

ASM International  Advantest Corp

Very good diversification

The 3 months correlation between ASM and Advantest is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding ASM International NV and Advantest Corp DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advantest Corp DRC and ASM International 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 ASM International NV are associated (or correlated) with Advantest Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advantest Corp DRC has no effect on the direction of ASM International i.e., ASM International and Advantest Corp go up and down completely randomly.

Pair Corralation between ASM International and Advantest Corp

If you would invest  59,628  in ASM International NV on October 22, 2024 and sell it today you would earn a total of  3,572  from holding ASM International NV or generate 5.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	5.26%
Values	Daily Returns

ASM International NV  vs.  Advantest Corp DRC

ASM International

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ASM International NV are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ASM International may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Advantest Corp DRC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Advantest Corp DRC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Advantest Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ASM International and Advantest Corp

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

The idea behind ASM International NV and Advantest Corp DRC 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..