Correlation Between ASE Industrial and Levi Strauss

Can any of the company-specific risk be diversified away by investing in both ASE Industrial and Levi Strauss 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 ASE Industrial and Levi Strauss into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ASE Industrial Holding and Levi Strauss Co, you can compare the effects of market volatilities on ASE Industrial and Levi Strauss 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 ASE Industrial with a short position of Levi Strauss. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASE Industrial and Levi Strauss.

Diversification Opportunities for ASE Industrial and Levi Strauss

0.49

Correlation Coefficient

ASE Industrial  Levi Strauss

Very weak diversification

The 3 months correlation between ASE and Levi is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding ASE Industrial Holding and Levi Strauss Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Levi Strauss and ASE Industrial 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 ASE Industrial Holding are associated (or correlated) with Levi Strauss. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Levi Strauss has no effect on the direction of ASE Industrial i.e., ASE Industrial and Levi Strauss go up and down completely randomly.

Pair Corralation between ASE Industrial and Levi Strauss

Considering the 90-day investment horizon ASE Industrial Holding is expected to generate 0.95 times more return on investment than Levi Strauss. However, ASE Industrial Holding is 1.06 times less risky than Levi Strauss. It trades about 0.06 of its potential returns per unit of risk. Levi Strauss Co is currently generating about 0.01 per unit of risk. If you would invest  665.00  in ASE Industrial Holding on October 26, 2024 and sell it today you would earn a total of  421.00  from holding ASE Industrial Holding or generate 63.31% return on investment over 90 days.

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

ASE Industrial Holding  vs.  Levi Strauss Co

ASE Industrial Holding

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ASE Industrial Holding are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, ASE Industrial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Levi Strauss

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Levi Strauss Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Levi Strauss is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with ASE Industrial and Levi Strauss

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

The idea behind ASE Industrial Holding and Levi Strauss Co 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 Transaction History module to view history of all your transactions and understand their impact on performance.