Correlation Between AU Optronics and Chin Poon
Can any of the company-specific risk be diversified away by investing in both AU Optronics and Chin Poon 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 Chin Poon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AU Optronics and Chin Poon Industrial Co, you can compare the effects of market volatilities on AU Optronics and Chin Poon 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 Chin Poon. Check out your portfolio center. Please also check ongoing floating volatility patterns of AU Optronics and Chin Poon.
Diversification Opportunities for AU Optronics and Chin Poon
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 2409 and Chin is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding AU Optronics and Chin Poon Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chin Poon Industrial 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 Chin Poon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chin Poon Industrial has no effect on the direction of AU Optronics i.e., AU Optronics and Chin Poon go up and down completely randomly.
Pair Corralation between AU Optronics and Chin Poon
Assuming the 90 days trading horizon AU Optronics is expected to generate 1.08 times more return on investment than Chin Poon. However, AU Optronics is 1.08 times more volatile than Chin Poon Industrial Co. It trades about -0.03 of its potential returns per unit of risk. Chin Poon Industrial Co is currently generating about -0.03 per unit of risk. If you would invest 1,625 in AU Optronics on September 12, 2024 and sell it today you would lose (50.00) from holding AU Optronics or give up 3.08% 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. Chin Poon Industrial Co
Performance |
| Timeline |
| AU Optronics |
| Chin Poon Industrial |
AU Optronics and Chin Poon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AU Optronics and Chin Poon
The main advantage of trading using opposite AU Optronics and Chin Poon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AU Optronics position performs unexpectedly, Chin Poon 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 Chin Poon will offset losses from the drop in Chin Poon's long position.| AU Optronics vs. Innolux Corp | AU Optronics vs. United Microelectronics | AU Optronics vs. China Steel Corp | AU Optronics vs. Quanta Computer |
| Chin Poon vs. Compeq Manufacturing Co | Chin Poon vs. Unitech Printed Circuit | Chin Poon vs. Gold Circuit Electronics | Chin Poon vs. WUS Printed Circuit |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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