Correlation Between AU Optronics and Acer
Can any of the company-specific risk be diversified away by investing in both AU Optronics and Acer 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 Acer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AU Optronics and Acer Inc, you can compare the effects of market volatilities on AU Optronics and Acer 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 Acer. Check out your portfolio center. Please also check ongoing floating volatility patterns of AU Optronics and Acer.
Diversification Opportunities for AU Optronics and Acer
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 2409 and Acer is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding AU Optronics and Acer Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acer Inc 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 Acer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acer Inc has no effect on the direction of AU Optronics i.e., AU Optronics and Acer go up and down completely randomly.
Pair Corralation between AU Optronics and Acer
Assuming the 90 days trading horizon AU Optronics is expected to generate 1.03 times more return on investment than Acer. However, AU Optronics is 1.03 times more volatile than Acer Inc. It trades about -0.14 of its potential returns per unit of risk. Acer Inc is currently generating about -0.18 per unit of risk. If you would invest 1,485 in AU Optronics on October 30, 2024 and sell it today you would lose (70.00) from holding AU Optronics or give up 4.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AU Optronics vs. Acer Inc
Performance |
| Timeline |
| AU Optronics |
| Acer Inc |
AU Optronics and Acer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AU Optronics and Acer
The main advantage of trading using opposite AU Optronics and Acer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AU Optronics position performs unexpectedly, Acer 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 Acer will offset losses from the drop in Acer's long position.| AU Optronics vs. Unimicron Technology Corp | AU Optronics vs. Kinsus Interconnect Technology | AU Optronics vs. Novatek Microelectronics Corp | AU Optronics vs. Delta Electronics |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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