Correlation Between Quanta Computer and AU Optronics
Can any of the company-specific risk be diversified away by investing in both Quanta Computer 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 Quanta Computer and AU Optronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Quanta Computer and AU Optronics, you can compare the effects of market volatilities on Quanta Computer 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 Quanta Computer with a short position of AU Optronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quanta Computer and AU Optronics.
Diversification Opportunities for Quanta Computer and AU Optronics
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Quanta and 2409 is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Quanta Computer and AU Optronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AU Optronics and Quanta 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 Quanta Computer 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 Quanta Computer i.e., Quanta Computer and AU Optronics go up and down completely randomly.
Pair Corralation between Quanta Computer and AU Optronics
Assuming the 90 days trading horizon Quanta Computer is expected to under-perform the AU Optronics. In addition to that, Quanta Computer is 1.12 times more volatile than AU Optronics. It trades about -0.11 of its total potential returns per unit of risk. AU Optronics is currently generating about -0.05 per unit of volatility. If you would invest 1,440 in AU Optronics on November 2, 2024 and sell it today you would lose (25.00) from holding AU Optronics or give up 1.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Quanta Computer vs. AU Optronics
Performance |
| Timeline |
| Quanta Computer |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| AU Optronics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Quanta Computer and AU Optronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Quanta Computer and AU Optronics
The main advantage of trading using opposite Quanta Computer and AU Optronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quanta Computer 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.The idea behind Quanta Computer and AU Optronics 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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