Correlation Between AU Optronics and Weikeng Industrial
Can any of the company-specific risk be diversified away by investing in both AU Optronics and Weikeng Industrial 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 Weikeng Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AU Optronics and Weikeng Industrial Co, you can compare the effects of market volatilities on AU Optronics and Weikeng Industrial 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 Weikeng Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of AU Optronics and Weikeng Industrial.
Diversification Opportunities for AU Optronics and Weikeng Industrial
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between 2409 and Weikeng is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding AU Optronics and Weikeng Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weikeng Industrial 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 Weikeng Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weikeng Industrial has no effect on the direction of AU Optronics i.e., AU Optronics and Weikeng Industrial go up and down completely randomly.
Pair Corralation between AU Optronics and Weikeng Industrial
Assuming the 90 days trading horizon AU Optronics is expected to under-perform the Weikeng Industrial. In addition to that, AU Optronics is 2.61 times more volatile than Weikeng Industrial Co. It trades about -0.15 of its total potential returns per unit of risk. Weikeng Industrial Co is currently generating about 0.04 per unit of volatility. If you would invest 3,375 in Weikeng Industrial Co on October 20, 2024 and sell it today you would earn a total of 20.00 from holding Weikeng Industrial Co or generate 0.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
AU Optronics vs. Weikeng Industrial Co
Performance |
| Timeline |
| AU Optronics |
| Weikeng Industrial |
AU Optronics and Weikeng Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AU Optronics and Weikeng Industrial
The main advantage of trading using opposite AU Optronics and Weikeng Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AU Optronics position performs unexpectedly, Weikeng Industrial 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 Weikeng Industrial will offset losses from the drop in Weikeng Industrial's long position.| AU Optronics vs. Innolux Corp | AU Optronics vs. United Microelectronics | AU Optronics vs. China Steel Corp | AU Optronics vs. Quanta Computer |
| Weikeng Industrial vs. ASRock Inc | Weikeng Industrial vs. FIC Global | Weikeng Industrial vs. In Win Development | Weikeng Industrial vs. Getac Technology Corp |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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