Correlation Between Sphere 3D and ASE Industrial

Can any of the company-specific risk be diversified away by investing in both Sphere 3D and ASE Industrial 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 Sphere 3D and ASE Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sphere 3D Corp and ASE Industrial Holding, you can compare the effects of market volatilities on Sphere 3D and ASE Industrial 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 Sphere 3D with a short position of ASE Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sphere 3D and ASE Industrial.

Diversification Opportunities for Sphere 3D and ASE Industrial

0.67

Correlation Coefficient

Sphere 3D  ASE Industrial

Poor diversification

The 3 months correlation between Sphere and ASE is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Sphere 3D Corp and ASE Industrial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASE Industrial Holding and Sphere 3D 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 Sphere 3D Corp are associated (or correlated) with ASE Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASE Industrial Holding has no effect on the direction of Sphere 3D i.e., Sphere 3D and ASE Industrial go up and down completely randomly.

Pair Corralation between Sphere 3D and ASE Industrial

Considering the 90-day investment horizon Sphere 3D Corp is expected to under-perform the ASE Industrial. In addition to that, Sphere 3D is 5.03 times more volatile than ASE Industrial Holding. It trades about -0.02 of its total potential returns per unit of risk. ASE Industrial Holding is currently generating about -0.02 per unit of volatility. If you would invest  1,136  in ASE Industrial Holding on March 12, 2024 and sell it today you would lose (33.99) from holding ASE Industrial Holding or give up 2.99% of portfolio value over 90 days.

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

Sphere 3D Corp  vs.  ASE Industrial Holding

Sphere 3D Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sphere 3D Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

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 latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sphere 3D and ASE Industrial

The main advantage of trading using opposite Sphere 3D and ASE Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sphere 3D position performs unexpectedly, ASE Industrial 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 ASE Industrial will offset losses from the drop in ASE Industrial's long position.

The idea behind Sphere 3D Corp and ASE Industrial Holding 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.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.