Correlation Between Taiwan Semiconductor and AU Optronics
Can any of the company-specific risk be diversified away by investing in both Taiwan Semiconductor and AU Optronics 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 Taiwan Semiconductor and AU Optronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Semiconductor Manufacturing and AU Optronics, you can compare the effects of market volatilities on Taiwan Semiconductor and AU Optronics 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 Taiwan Semiconductor with a short position of AU Optronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Semiconductor and AU Optronics.
Diversification Opportunities for Taiwan Semiconductor and AU Optronics
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Taiwan and 2409 is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Semiconductor Manufactu and AU Optronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AU Optronics and Taiwan Semiconductor 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 Taiwan Semiconductor Manufacturing are associated (or correlated) with AU Optronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AU Optronics has no effect on the direction of Taiwan Semiconductor i.e., Taiwan Semiconductor and AU Optronics go up and down completely randomly.
Pair Corralation between Taiwan Semiconductor and AU Optronics
Assuming the 90 days trading horizon Taiwan Semiconductor Manufacturing is expected to generate 0.97 times more return on investment than AU Optronics. However, Taiwan Semiconductor Manufacturing is 1.03 times less risky than AU Optronics. It trades about 0.1 of its potential returns per unit of risk. AU Optronics is currently generating about 0.01 per unit of risk. If you would invest 45,322 in Taiwan Semiconductor Manufacturing on September 3, 2024 and sell it today you would earn a total of 54,278 from holding Taiwan Semiconductor Manufacturing or generate 119.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Taiwan Semiconductor Manufactu vs. AU Optronics
Performance |
| Timeline |
| Taiwan Semiconductor |
| AU Optronics |
Taiwan Semiconductor and AU Optronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Semiconductor and AU Optronics
The main advantage of trading using opposite Taiwan Semiconductor and AU Optronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Semiconductor position performs unexpectedly, AU Optronics 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 AU Optronics will offset losses from the drop in AU Optronics' long position.| Taiwan Semiconductor vs. United Microelectronics | Taiwan Semiconductor vs. Hon Hai Precision | Taiwan Semiconductor vs. MediaTek | Taiwan Semiconductor vs. Taiwan Semiconductor Manufacturing |
| AU Optronics vs. Innolux Corp | AU Optronics vs. United Microelectronics | AU Optronics vs. China Steel Corp | AU Optronics vs. Quanta Computer |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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