Correlation Between AU Optronics and Biostar Microtech
Can any of the company-specific risk be diversified away by investing in both AU Optronics and Biostar Microtech 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 Biostar Microtech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AU Optronics and Biostar Microtech International, you can compare the effects of market volatilities on AU Optronics and Biostar Microtech 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 Biostar Microtech. Check out your portfolio center. Please also check ongoing floating volatility patterns of AU Optronics and Biostar Microtech.
Diversification Opportunities for AU Optronics and Biostar Microtech
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 2409 and Biostar is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding AU Optronics and Biostar Microtech Internationa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biostar Microtech 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 Biostar Microtech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biostar Microtech has no effect on the direction of AU Optronics i.e., AU Optronics and Biostar Microtech go up and down completely randomly.
Pair Corralation between AU Optronics and Biostar Microtech
Assuming the 90 days trading horizon AU Optronics is expected to generate 6.71 times less return on investment than Biostar Microtech. But when comparing it to its historical volatility, AU Optronics is 1.6 times less risky than Biostar Microtech. It trades about 0.02 of its potential returns per unit of risk. Biostar Microtech International is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,355 in Biostar Microtech International on September 13, 2024 and sell it today you would earn a total of 1,560 from holding Biostar Microtech International or generate 115.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AU Optronics vs. Biostar Microtech Internationa
Performance |
| Timeline |
| AU Optronics |
| Biostar Microtech |
AU Optronics and Biostar Microtech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AU Optronics and Biostar Microtech
The main advantage of trading using opposite AU Optronics and Biostar Microtech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AU Optronics position performs unexpectedly, Biostar Microtech 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 Biostar Microtech will offset losses from the drop in Biostar Microtech's long position.| AU Optronics vs. Innolux Corp | AU Optronics vs. United Microelectronics | AU Optronics vs. China Steel Corp | AU Optronics vs. Quanta Computer |
| Biostar Microtech vs. Elitegroup Computer Systems | Biostar Microtech vs. Gigabyte Technology Co | Biostar Microtech vs. Micro Star International Co | Biostar Microtech vs. Shuttle |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Transaction History View history of all your transactions and understand their impact on performance |