Correlation Between AU Optronics and Cheng Uei
Can any of the company-specific risk be diversified away by investing in both AU Optronics and Cheng Uei 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 Cheng Uei into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AU Optronics and Cheng Uei Precision, you can compare the effects of market volatilities on AU Optronics and Cheng Uei 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 Cheng Uei. Check out your portfolio center. Please also check ongoing floating volatility patterns of AU Optronics and Cheng Uei.
Diversification Opportunities for AU Optronics and Cheng Uei
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between 2409 and Cheng is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding AU Optronics and Cheng Uei Precision in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheng Uei Precision 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 Cheng Uei. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheng Uei Precision has no effect on the direction of AU Optronics i.e., AU Optronics and Cheng Uei go up and down completely randomly.
Pair Corralation between AU Optronics and Cheng Uei
Assuming the 90 days trading horizon AU Optronics is expected to generate 6.91 times less return on investment than Cheng Uei. But when comparing it to its historical volatility, AU Optronics is 1.27 times less risky than Cheng Uei. It trades about 0.01 of its potential returns per unit of risk. Cheng Uei Precision is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 3,602 in Cheng Uei Precision on September 3, 2024 and sell it today you would earn a total of 4,358 from holding Cheng Uei Precision or generate 120.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
AU Optronics vs. Cheng Uei Precision
Performance |
| Timeline |
| AU Optronics |
| Cheng Uei Precision |
AU Optronics and Cheng Uei Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AU Optronics and Cheng Uei
The main advantage of trading using opposite AU Optronics and Cheng Uei positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AU Optronics position performs unexpectedly, Cheng Uei 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 Cheng Uei will offset losses from the drop in Cheng Uei's long position.| AU Optronics vs. Innolux Corp | AU Optronics vs. United Microelectronics | AU Optronics vs. China Steel Corp | AU Optronics vs. Quanta Computer |
| Cheng Uei vs. Taiwan Semiconductor Manufacturing | Cheng Uei vs. Yang Ming Marine | Cheng Uei vs. ASE Industrial Holding | Cheng Uei vs. AU Optronics |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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