Correlation Between ASE Industrial and Maxeon Solar

Can any of the company-specific risk be diversified away by investing in both ASE Industrial and Maxeon Solar 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 Maxeon Solar 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 Maxeon Solar Technologies, you can compare the effects of market volatilities on ASE Industrial and Maxeon Solar 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 Maxeon Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASE Industrial and Maxeon Solar.

Diversification Opportunities for ASE Industrial and Maxeon Solar

-0.51

Correlation Coefficient

ASE Industrial  Maxeon Solar

Excellent diversification

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

Pair Corralation between ASE Industrial and Maxeon Solar

Considering the 90-day investment horizon ASE Industrial is expected to generate 1.69 times less return on investment than Maxeon Solar. But when comparing it to its historical volatility, ASE Industrial Holding is 3.5 times less risky than Maxeon Solar. It trades about 0.12 of its potential returns per unit of risk. Maxeon Solar Technologies is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  798.00  in Maxeon Solar Technologies on September 26, 2024 and sell it today you would earn a total of  28.00  from holding Maxeon Solar Technologies or generate 3.51% return on investment over 90 days.

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

ASE Industrial Holding  vs.  Maxeon Solar Technologies

ASE Industrial Holding

Risk-Adjusted Performance

0 of 100

Weak

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

Maxeon Solar Technologies

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Maxeon Solar Technologies are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Maxeon Solar displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ASE Industrial and Maxeon Solar

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

The idea behind ASE Industrial Holding and Maxeon Solar Technologies 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.