Correlation Between ASE Industrial and Nano Labs

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

Diversification Opportunities for ASE Industrial and Nano Labs

0.09

Correlation Coefficient

ASE Industrial  Nano Labs

Significant diversification

The 3 months correlation between ASE and Nano is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding ASE Industrial Holding and Nano Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nano Labs 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 Nano Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nano Labs has no effect on the direction of ASE Industrial i.e., ASE Industrial and Nano Labs go up and down completely randomly.

Pair Corralation between ASE Industrial and Nano Labs

Considering the 90-day investment horizon ASE Industrial is expected to generate 3.41 times less return on investment than Nano Labs. But when comparing it to its historical volatility, ASE Industrial Holding is 4.97 times less risky than Nano Labs. It trades about 0.12 of its potential returns per unit of risk. Nano Labs is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  839.00  in Nano Labs on September 26, 2024 and sell it today you would earn a total of  60.00  from holding Nano Labs or generate 7.15% return on investment over 90 days.

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

ASE Industrial Holding  vs.  Nano Labs

ASE Industrial Holding

Risk-Adjusted Performance

0 of 100

Very 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.

Nano Labs

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nano Labs are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Nano Labs sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ASE Industrial and Nano Labs

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

The idea behind ASE Industrial Holding and Nano Labs 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.