Correlation Between AU Optronics and Ares International
Can any of the company-specific risk be diversified away by investing in both AU Optronics and Ares International 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 Ares International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AU Optronics and Ares International Corp, you can compare the effects of market volatilities on AU Optronics and Ares International 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 Ares International. Check out your portfolio center. Please also check ongoing floating volatility patterns of AU Optronics and Ares International.
Diversification Opportunities for AU Optronics and Ares International
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 2409 and Ares is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding AU Optronics and Ares International Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares International 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 Ares International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ares International Corp has no effect on the direction of AU Optronics i.e., AU Optronics and Ares International go up and down completely randomly.
Pair Corralation between AU Optronics and Ares International
Assuming the 90 days trading horizon AU Optronics is expected to generate 1.99 times more return on investment than Ares International. However, AU Optronics is 1.99 times more volatile than Ares International Corp. It trades about -0.07 of its potential returns per unit of risk. Ares International Corp is currently generating about -0.19 per unit of risk. If you would invest 1,605 in AU Optronics on September 3, 2024 and sell it today you would lose (45.00) from holding AU Optronics or give up 2.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AU Optronics vs. Ares International Corp
Performance |
| Timeline |
| AU Optronics |
| Ares International Corp |
AU Optronics and Ares International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AU Optronics and Ares International
The main advantage of trading using opposite AU Optronics and Ares International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AU Optronics position performs unexpectedly, Ares International 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 Ares International will offset losses from the drop in Ares International's long position.| AU Optronics vs. Innolux Corp | AU Optronics vs. United Microelectronics | AU Optronics vs. China Steel Corp | AU Optronics vs. Quanta Computer |
| Ares International vs. Taiwan Semiconductor Manufacturing | Ares International vs. Yang Ming Marine | Ares International vs. ASE Industrial Holding | Ares International 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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