Correlation Between AU Optronics and Yageo Corp
Can any of the company-specific risk be diversified away by investing in both AU Optronics and Yageo Corp 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 Yageo Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AU Optronics and Yageo Corp, you can compare the effects of market volatilities on AU Optronics and Yageo Corp 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 Yageo Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of AU Optronics and Yageo Corp.
Diversification Opportunities for AU Optronics and Yageo Corp
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 2409 and Yageo is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding AU Optronics and Yageo Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yageo Corp 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 Yageo Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yageo Corp has no effect on the direction of AU Optronics i.e., AU Optronics and Yageo Corp go up and down completely randomly.
Pair Corralation between AU Optronics and Yageo Corp
Assuming the 90 days trading horizon AU Optronics is expected to under-perform the Yageo Corp. But the stock apears to be less risky and, when comparing its historical volatility, AU Optronics is 1.01 times less risky than Yageo Corp. The stock trades about -0.01 of its potential returns per unit of risk. The Yageo Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 51,600 in Yageo Corp on November 27, 2024 and sell it today you would earn a total of 7,800 from holding Yageo Corp or generate 15.12% 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. Yageo Corp
Performance |
| Timeline |
| AU Optronics |
| Yageo Corp |
AU Optronics and Yageo Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AU Optronics and Yageo Corp
The main advantage of trading using opposite AU Optronics and Yageo Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AU Optronics position performs unexpectedly, Yageo Corp 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 Yageo Corp will offset losses from the drop in Yageo Corp's long position.| AU Optronics vs. Innolux Corp | AU Optronics vs. United Microelectronics | AU Optronics vs. China Steel Corp | AU Optronics vs. Quanta Computer |
| Yageo Corp vs. Oceanic Beverages Co | Yageo Corp vs. Formosan Union Chemical | Yageo Corp vs. First Copper Technology | Yageo Corp vs. China Metal Products |
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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