Correlation Between AU Optronics and Chaintech Technology
Can any of the company-specific risk be diversified away by investing in both AU Optronics and Chaintech Technology 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 Chaintech Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AU Optronics and Chaintech Technology Corp, you can compare the effects of market volatilities on AU Optronics and Chaintech Technology 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 Chaintech Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of AU Optronics and Chaintech Technology.
Diversification Opportunities for AU Optronics and Chaintech Technology
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 2409 and Chaintech is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding AU Optronics and Chaintech Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chaintech Technology Corp 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 Chaintech Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chaintech Technology Corp has no effect on the direction of AU Optronics i.e., AU Optronics and Chaintech Technology go up and down completely randomly.
Pair Corralation between AU Optronics and Chaintech Technology
Assuming the 90 days trading horizon AU Optronics is expected to under-perform the Chaintech Technology. But the stock apears to be less risky and, when comparing its historical volatility, AU Optronics is 1.7 times less risky than Chaintech Technology. The stock trades about -0.04 of its potential returns per unit of risk. The Chaintech Technology Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 3,765 in Chaintech Technology Corp on September 3, 2024 and sell it today you would earn a total of 25.00 from holding Chaintech Technology Corp or generate 0.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AU Optronics vs. Chaintech Technology Corp
Performance |
| Timeline |
| AU Optronics |
| Chaintech Technology Corp |
AU Optronics and Chaintech Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AU Optronics and Chaintech Technology
The main advantage of trading using opposite AU Optronics and Chaintech Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AU Optronics position performs unexpectedly, Chaintech Technology 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 Chaintech Technology will offset losses from the drop in Chaintech Technology's long position.| AU Optronics vs. Innolux Corp | AU Optronics vs. United Microelectronics | AU Optronics vs. China Steel Corp | AU Optronics vs. Quanta Computer |
| Chaintech Technology vs. Taiwan Semiconductor Manufacturing | Chaintech Technology vs. Yang Ming Marine | Chaintech Technology vs. ASE Industrial Holding | Chaintech Technology 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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