Correlation Between Asmedia Technology and ESUN Financial
Can any of the company-specific risk be diversified away by investing in both Asmedia Technology and ESUN Financial 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 Asmedia Technology and ESUN Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asmedia Technology and ESUN Financial Holding, you can compare the effects of market volatilities on Asmedia Technology and ESUN Financial 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 Asmedia Technology with a short position of ESUN Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asmedia Technology and ESUN Financial.
Diversification Opportunities for Asmedia Technology and ESUN Financial
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Asmedia and ESUN is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Asmedia Technology and ESUN Financial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESUN Financial Holding and Asmedia Technology 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 Asmedia Technology are associated (or correlated) with ESUN Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESUN Financial Holding has no effect on the direction of Asmedia Technology i.e., Asmedia Technology and ESUN Financial go up and down completely randomly.
Pair Corralation between Asmedia Technology and ESUN Financial
Assuming the 90 days trading horizon Asmedia Technology is expected to generate 3.47 times more return on investment than ESUN Financial. However, Asmedia Technology is 3.47 times more volatile than ESUN Financial Holding. It trades about 0.04 of its potential returns per unit of risk. ESUN Financial Holding is currently generating about 0.03 per unit of risk. If you would invest 130,101 in Asmedia Technology on February 21, 2024 and sell it today you would earn a total of 61,399 from holding Asmedia Technology or generate 47.19% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Asmedia Technology vs. ESUN Financial Holding
Performance |
Timeline |
Asmedia Technology |
ESUN Financial Holding |
Asmedia Technology and ESUN Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Asmedia Technology and ESUN Financial
The main advantage of trading using opposite Asmedia Technology and ESUN Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asmedia Technology position performs unexpectedly, ESUN Financial 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 ESUN Financial will offset losses from the drop in ESUN Financial's long position.Asmedia Technology vs. Bright Led Electronics | Asmedia Technology vs. Action Electronics Co | Asmedia Technology vs. Ruentex Development Co |
ESUN Financial vs. Mega Financial Holding | ESUN Financial vs. Yuanta Financial Holdings | ESUN Financial vs. Taiwan Cooperative Financial |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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