Correlation Between AU Optronics and Farcent Enterprise
Can any of the company-specific risk be diversified away by investing in both AU Optronics and Farcent Enterprise 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 AU Optronics and Farcent Enterprise into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AU Optronics and Farcent Enterprise Co, you can compare the effects of market volatilities on AU Optronics and Farcent Enterprise 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 AU Optronics with a short position of Farcent Enterprise. Check out your portfolio center. Please also check ongoing floating volatility patterns of AU Optronics and Farcent Enterprise.
Diversification Opportunities for AU Optronics and Farcent Enterprise
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 2409 and Farcent is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding AU Optronics and Farcent Enterprise Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farcent Enterprise and AU Optronics 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 AU Optronics are associated (or correlated) with Farcent Enterprise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farcent Enterprise has no effect on the direction of AU Optronics i.e., AU Optronics and Farcent Enterprise go up and down completely randomly.
Pair Corralation between AU Optronics and Farcent Enterprise
Assuming the 90 days trading horizon AU Optronics is expected to generate 1.55 times less return on investment than Farcent Enterprise. In addition to that, AU Optronics is 2.56 times more volatile than Farcent Enterprise Co. It trades about 0.04 of its total potential returns per unit of risk. Farcent Enterprise Co is currently generating about 0.15 per unit of volatility. If you would invest 5,290 in Farcent Enterprise Co on September 13, 2024 and sell it today you would earn a total of 90.00 from holding Farcent Enterprise Co or generate 1.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AU Optronics vs. Farcent Enterprise Co
Performance |
| Timeline |
| AU Optronics |
| Farcent Enterprise |
AU Optronics and Farcent Enterprise Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AU Optronics and Farcent Enterprise
The main advantage of trading using opposite AU Optronics and Farcent Enterprise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AU Optronics position performs unexpectedly, Farcent Enterprise 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 Farcent Enterprise will offset losses from the drop in Farcent Enterprise's long position.| AU Optronics vs. Innolux Corp | AU Optronics vs. Ruentex Development Co | AU Optronics vs. WiseChip Semiconductor | AU Optronics vs. Novatek Microelectronics Corp |
| Farcent Enterprise vs. Charoen Pokphand Enterprise | Farcent Enterprise vs. Yung Chi Paint | Farcent Enterprise vs. TTET Union Corp | Farcent Enterprise vs. Taiwan Secom 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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