Correlation Between AU Optronics and Optotech Corp
Can any of the company-specific risk be diversified away by investing in both AU Optronics and Optotech 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 Optotech 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 Optotech Corp, you can compare the effects of market volatilities on AU Optronics and Optotech 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 Optotech Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of AU Optronics and Optotech Corp.
Diversification Opportunities for AU Optronics and Optotech Corp
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 2409 and Optotech is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding AU Optronics and Optotech Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optotech 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 Optotech Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optotech Corp has no effect on the direction of AU Optronics i.e., AU Optronics and Optotech Corp go up and down completely randomly.
Pair Corralation between AU Optronics and Optotech Corp
Assuming the 90 days trading horizon AU Optronics is expected to generate 1.35 times less return on investment than Optotech Corp. But when comparing it to its historical volatility, AU Optronics is 2.3 times less risky than Optotech Corp. It trades about 0.33 of its potential returns per unit of risk. Optotech Corp is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 2,655 in Optotech Corp on November 28, 2024 and sell it today you would earn a total of 330.00 from holding Optotech Corp or generate 12.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AU Optronics vs. Optotech Corp
Performance |
| Timeline |
| AU Optronics |
| Optotech Corp |
AU Optronics and Optotech Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AU Optronics and Optotech Corp
The main advantage of trading using opposite AU Optronics and Optotech Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AU Optronics position performs unexpectedly, Optotech 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 Optotech Corp will offset losses from the drop in Optotech 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 |
| Optotech Corp vs. Everlight Electronics Co | Optotech Corp vs. Winbond Electronics Corp | Optotech Corp vs. Macronix International Co | Optotech Corp vs. Lite On Technology 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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