Correlation Between AU Optronics and Chicony Electronics
Can any of the company-specific risk be diversified away by investing in both AU Optronics and Chicony Electronics 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 Chicony Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AU Optronics and Chicony Electronics Co, you can compare the effects of market volatilities on AU Optronics and Chicony Electronics 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 Chicony Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of AU Optronics and Chicony Electronics.
Diversification Opportunities for AU Optronics and Chicony Electronics
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 2409 and Chicony is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding AU Optronics and Chicony Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chicony Electronics 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 Chicony Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chicony Electronics has no effect on the direction of AU Optronics i.e., AU Optronics and Chicony Electronics go up and down completely randomly.
Pair Corralation between AU Optronics and Chicony Electronics
Assuming the 90 days trading horizon AU Optronics is expected to generate 1.04 times more return on investment than Chicony Electronics. However, AU Optronics is 1.04 times more volatile than Chicony Electronics Co. It trades about -0.05 of its potential returns per unit of risk. Chicony Electronics Co is currently generating about -0.08 per unit of risk. If you would invest 1,830 in AU Optronics on September 12, 2024 and sell it today you would lose (270.00) from holding AU Optronics or give up 14.75% 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. Chicony Electronics Co
Performance |
| Timeline |
| AU Optronics |
| Chicony Electronics |
AU Optronics and Chicony Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AU Optronics and Chicony Electronics
The main advantage of trading using opposite AU Optronics and Chicony Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AU Optronics position performs unexpectedly, Chicony Electronics 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 Chicony Electronics will offset losses from the drop in Chicony Electronics' long position.| AU Optronics vs. Innolux Corp | AU Optronics vs. Ruentex Development Co | AU Optronics vs. WiseChip Semiconductor | AU Optronics vs. Novatek Microelectronics Corp |
| Chicony Electronics vs. AU Optronics | Chicony Electronics vs. Innolux Corp | Chicony Electronics vs. Ruentex Development Co | Chicony Electronics vs. WiseChip Semiconductor |
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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