Correlation Between AU Optronics and Leadtek Research
Can any of the company-specific risk be diversified away by investing in both AU Optronics and Leadtek Research 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 Leadtek Research into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AU Optronics and Leadtek Research, you can compare the effects of market volatilities on AU Optronics and Leadtek Research 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 Leadtek Research. Check out your portfolio center. Please also check ongoing floating volatility patterns of AU Optronics and Leadtek Research.
Diversification Opportunities for AU Optronics and Leadtek Research
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 2409 and Leadtek is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding AU Optronics and Leadtek Research in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leadtek Research 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 Leadtek Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leadtek Research has no effect on the direction of AU Optronics i.e., AU Optronics and Leadtek Research go up and down completely randomly.
Pair Corralation between AU Optronics and Leadtek Research
Assuming the 90 days trading horizon AU Optronics is expected to generate 0.38 times more return on investment than Leadtek Research. However, AU Optronics is 2.64 times less risky than Leadtek Research. It trades about -0.12 of its potential returns per unit of risk. Leadtek Research is currently generating about -0.07 per unit of risk. If you would invest 1,695 in AU Optronics on September 12, 2024 and sell it today you would lose (135.00) from holding AU Optronics or give up 7.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.67% |
| Values | Daily Returns |
AU Optronics vs. Leadtek Research
Performance |
| Timeline |
| AU Optronics |
| Leadtek Research |
AU Optronics and Leadtek Research Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AU Optronics and Leadtek Research
The main advantage of trading using opposite AU Optronics and Leadtek Research positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AU Optronics position performs unexpectedly, Leadtek Research 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 Leadtek Research will offset losses from the drop in Leadtek Research's long position.| AU Optronics vs. Innolux Corp | AU Optronics vs. Ruentex Development Co | AU Optronics vs. WiseChip Semiconductor | AU Optronics vs. Novatek Microelectronics Corp |
| Leadtek Research vs. Elitegroup Computer Systems | Leadtek Research vs. Gigabyte Technology Co | Leadtek Research vs. Micro Star International Co | Leadtek Research vs. Biostar Microtech International |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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