Correlation Between Asm Pacific and US Bancorp
Can any of the company-specific risk be diversified away by investing in both Asm Pacific and US Bancorp 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 Pacific and US Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asm Pacific Technology and US Bancorp PERP, you can compare the effects of market volatilities on Asm Pacific and US Bancorp 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 Pacific with a short position of US Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asm Pacific and US Bancorp.
Diversification Opportunities for Asm Pacific and US Bancorp
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Asm and USB-PA is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Asm Pacific Technology and US Bancorp PERP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Bancorp PERP and Asm Pacific 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 Pacific Technology are associated (or correlated) with US Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Bancorp PERP has no effect on the direction of Asm Pacific i.e., Asm Pacific and US Bancorp go up and down completely randomly.
Pair Corralation between Asm Pacific and US Bancorp
Assuming the 90 days horizon Asm Pacific Technology is expected to generate 2.76 times more return on investment than US Bancorp. However, Asm Pacific is 2.76 times more volatile than US Bancorp PERP. It trades about 0.07 of its potential returns per unit of risk. US Bancorp PERP is currently generating about 0.05 per unit of risk. If you would invest 3,773 in Asm Pacific Technology on January 26, 2024 and sell it today you would earn a total of 141.00 from holding Asm Pacific Technology or generate 3.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Asm Pacific Technology vs. US Bancorp PERP
Performance |
| Timeline |
| Asm Pacific Technology |
| US Bancorp PERP |
Asm Pacific and US Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asm Pacific and US Bancorp
The main advantage of trading using opposite Asm Pacific and US Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asm Pacific position performs unexpectedly, US Bancorp 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 US Bancorp will offset losses from the drop in US Bancorp's long position.| Asm Pacific vs. SCREEN Holdings Co | Asm Pacific vs. Disco Corp ADR | Asm Pacific vs. Tokyo Electron | Asm Pacific vs. Lasertec |
| US Bancorp vs. KeyCorp | US Bancorp vs. Regions Financial | US Bancorp vs. US Bancorp | US Bancorp vs. KeyCorp |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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