Correlation Between AU Optronics and Delta Electronics
Can any of the company-specific risk be diversified away by investing in both AU Optronics and Delta Electronics 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 Delta Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AU Optronics and Delta Electronics, you can compare the effects of market volatilities on AU Optronics and Delta Electronics 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 Delta Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of AU Optronics and Delta Electronics.
Diversification Opportunities for AU Optronics and Delta Electronics
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 2409 and Delta is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding AU Optronics and Delta Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delta Electronics 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 Delta Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delta Electronics has no effect on the direction of AU Optronics i.e., AU Optronics and Delta Electronics go up and down completely randomly.
Pair Corralation between AU Optronics and Delta Electronics
Assuming the 90 days trading horizon AU Optronics is expected to generate 147.86 times less return on investment than Delta Electronics. But when comparing it to its historical volatility, AU Optronics is 1.16 times less risky than Delta Electronics. It trades about 0.0 of its potential returns per unit of risk. Delta Electronics is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 30,800 in Delta Electronics on September 1, 2024 and sell it today you would earn a total of 7,300 from holding Delta Electronics or generate 23.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AU Optronics vs. Delta Electronics
Performance |
| Timeline |
| AU Optronics |
| Delta Electronics |
AU Optronics and Delta Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AU Optronics and Delta Electronics
The main advantage of trading using opposite AU Optronics and Delta Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AU Optronics position performs unexpectedly, Delta Electronics 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 Delta Electronics will offset losses from the drop in Delta Electronics' long position.| AU Optronics vs. Innolux Corp | AU Optronics vs. United Microelectronics | AU Optronics vs. China Steel Corp | AU Optronics vs. Quanta Computer |
| Delta Electronics vs. Quanta Computer | Delta Electronics vs. Hon Hai Precision | Delta Electronics vs. United Microelectronics | Delta Electronics vs. LARGAN Precision 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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