Correlation Between ASE Industrial and NVIDIA
Can any of the company-specific risk be diversified away by investing in both ASE Industrial and NVIDIA 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 NVIDIA 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 NVIDIA, you can compare the effects of market volatilities on ASE Industrial and NVIDIA 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 NVIDIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASE Industrial and NVIDIA.
Diversification Opportunities for ASE Industrial and NVIDIA
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ASE and NVIDIA is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding ASE Industrial Holding and NVIDIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NVIDIA 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 NVIDIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NVIDIA has no effect on the direction of ASE Industrial i.e., ASE Industrial and NVIDIA go up and down completely randomly.
Pair Corralation between ASE Industrial and NVIDIA
Considering the 90-day investment horizon ASE Industrial Holding is expected to generate 0.64 times more return on investment than NVIDIA. However, ASE Industrial Holding is 1.57 times less risky than NVIDIA. It trades about -0.04 of its potential returns per unit of risk. NVIDIA is currently generating about -0.05 per unit of risk. If you would invest 1,034 in ASE Industrial Holding on December 27, 2024 and sell it today you would lose (84.00) from holding ASE Industrial Holding or give up 8.12% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
ASE Industrial Holding vs. NVIDIA
Performance |
Timeline |
ASE Industrial Holding |
NVIDIA |
ASE Industrial and NVIDIA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ASE Industrial and NVIDIA
The main advantage of trading using opposite ASE Industrial and NVIDIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASE Industrial position performs unexpectedly, NVIDIA 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 NVIDIA will offset losses from the drop in NVIDIA's long position.ASE Industrial vs. United Microelectronics | ASE Industrial vs. Amkor Technology | ASE Industrial vs. Himax Technologies | ASE Industrial vs. Chunghwa Telecom Co |
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Check out your portfolio center.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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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