Correlation Between AU Optronics and Ichia Technologies
Can any of the company-specific risk be diversified away by investing in both AU Optronics and Ichia Technologies 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 Ichia Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AU Optronics and Ichia Technologies, you can compare the effects of market volatilities on AU Optronics and Ichia Technologies 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 Ichia Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of AU Optronics and Ichia Technologies.
Diversification Opportunities for AU Optronics and Ichia Technologies
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 2409 and Ichia is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding AU Optronics and Ichia Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ichia Technologies 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 Ichia Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ichia Technologies has no effect on the direction of AU Optronics i.e., AU Optronics and Ichia Technologies go up and down completely randomly.
Pair Corralation between AU Optronics and Ichia Technologies
Assuming the 90 days trading horizon AU Optronics is expected to generate 0.81 times more return on investment than Ichia Technologies. However, AU Optronics is 1.23 times less risky than Ichia Technologies. It trades about -0.03 of its potential returns per unit of risk. Ichia Technologies is currently generating about -0.06 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. Ichia Technologies
Performance |
| Timeline |
| AU Optronics |
| Ichia Technologies |
AU Optronics and Ichia Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AU Optronics and Ichia Technologies
The main advantage of trading using opposite AU Optronics and Ichia Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AU Optronics position performs unexpectedly, Ichia Technologies 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 Ichia Technologies will offset losses from the drop in Ichia Technologies' long position.| AU Optronics vs. Innolux Corp | AU Optronics vs. United Microelectronics | AU Optronics vs. China Steel Corp | AU Optronics vs. Quanta Computer |
| Ichia Technologies vs. AU Optronics | Ichia Technologies vs. Innolux Corp | Ichia Technologies vs. Ruentex Development Co | Ichia Technologies 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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