Correlation Between AU Optronics and Lite On
Can any of the company-specific risk be diversified away by investing in both AU Optronics and Lite On 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 Lite On into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AU Optronics and Lite On Technology Corp, you can compare the effects of market volatilities on AU Optronics and Lite On 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 Lite On. Check out your portfolio center. Please also check ongoing floating volatility patterns of AU Optronics and Lite On.
Diversification Opportunities for AU Optronics and Lite On
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between 2409 and Lite is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding AU Optronics and Lite On Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lite On Technology 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 Lite On. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lite On Technology has no effect on the direction of AU Optronics i.e., AU Optronics and Lite On go up and down completely randomly.
Pair Corralation between AU Optronics and Lite On
Assuming the 90 days trading horizon AU Optronics is expected to under-perform the Lite On. But the stock apears to be less risky and, when comparing its historical volatility, AU Optronics is 1.16 times less risky than Lite On. The stock trades about -0.15 of its potential returns per unit of risk. The Lite On Technology Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 10,250 in Lite On Technology Corp on September 1, 2024 and sell it today you would earn a total of 150.00 from holding Lite On Technology Corp or generate 1.46% 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. Lite On Technology Corp
Performance |
| Timeline |
| AU Optronics |
| Lite On Technology |
AU Optronics and Lite On Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AU Optronics and Lite On
The main advantage of trading using opposite AU Optronics and Lite On positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AU Optronics position performs unexpectedly, Lite On 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 Lite On will offset losses from the drop in Lite On's long position.| AU Optronics vs. Innolux Corp | AU Optronics vs. United Microelectronics | AU Optronics vs. China Steel Corp | AU Optronics vs. Quanta Computer |
| Lite On vs. Compal Electronics | Lite On vs. Delta Electronics | Lite On vs. Quanta Computer | Lite On vs. Inventec Corp |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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