Correlation Between AU Optronics and Pan International
Can any of the company-specific risk be diversified away by investing in both AU Optronics and Pan International 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 Pan International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AU Optronics and Pan International Industrial Corp, you can compare the effects of market volatilities on AU Optronics and Pan International 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 Pan International. Check out your portfolio center. Please also check ongoing floating volatility patterns of AU Optronics and Pan International.
Diversification Opportunities for AU Optronics and Pan International
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 2409 and Pan is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding AU Optronics and Pan International Industrial C in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pan International 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 Pan International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pan International has no effect on the direction of AU Optronics i.e., AU Optronics and Pan International go up and down completely randomly.
Pair Corralation between AU Optronics and Pan International
Assuming the 90 days trading horizon AU Optronics is expected to generate 2.3 times less return on investment than Pan International. But when comparing it to its historical volatility, AU Optronics is 1.16 times less risky than Pan International. It trades about 0.04 of its potential returns per unit of risk. Pan International Industrial Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 3,425 in Pan International Industrial Corp on September 4, 2024 and sell it today you would earn a total of 260.00 from holding Pan International Industrial Corp or generate 7.59% 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. Pan International Industrial C
Performance |
| Timeline |
| AU Optronics |
| Pan International |
AU Optronics and Pan International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AU Optronics and Pan International
The main advantage of trading using opposite AU Optronics and Pan International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AU Optronics position performs unexpectedly, Pan International 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 Pan International will offset losses from the drop in Pan International's long position.| AU Optronics vs. Innolux Corp | AU Optronics vs. United Microelectronics | AU Optronics vs. China Steel Corp | AU Optronics vs. Quanta Computer |
| Pan International vs. Taiwan Semiconductor Manufacturing | Pan International vs. Yang Ming Marine | Pan International vs. AU Optronics | Pan International vs. Nan Ya Plastics |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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