Correlation Between Asustek Computer and Acer
Can any of the company-specific risk be diversified away by investing in both Asustek Computer and Acer 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 Asustek Computer and Acer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asustek Computer and Acer Inc, you can compare the effects of market volatilities on Asustek Computer and Acer 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 Asustek Computer with a short position of Acer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asustek Computer and Acer.
Diversification Opportunities for Asustek Computer and Acer
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Asustek and Acer is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Asustek Computer and Acer Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acer Inc and Asustek Computer 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 Asustek Computer are associated (or correlated) with Acer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acer Inc has no effect on the direction of Asustek Computer i.e., Asustek Computer and Acer go up and down completely randomly.
Pair Corralation between Asustek Computer and Acer
Assuming the 90 days trading horizon Asustek Computer is expected to generate 1.13 times more return on investment than Acer. However, Asustek Computer is 1.13 times more volatile than Acer Inc. It trades about 0.07 of its potential returns per unit of risk. Acer Inc is currently generating about 0.02 per unit of risk. If you would invest 47,300 in Asustek Computer on February 20, 2024 and sell it today you would earn a total of 4,300 from holding Asustek Computer or generate 9.09% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Asustek Computer vs. Acer Inc
Performance |
Timeline |
Asustek Computer |
Acer Inc |
Asustek Computer and Acer Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Asustek Computer and Acer
The main advantage of trading using opposite Asustek Computer and Acer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asustek Computer position performs unexpectedly, Acer 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 Acer will offset losses from the drop in Acer's long position.Asustek Computer vs. D Link Corp | Asustek Computer vs. Cheng Uei Precision | Asustek Computer vs. Senao International Co | Asustek Computer vs. Amtran Technology Co |
Acer vs. D Link Corp | Acer vs. Cheng Uei Precision | Acer vs. Senao International Co | Acer vs. Amtran Technology Co |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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