Correlation Between AU Optronics and Emerging Display
Can any of the company-specific risk be diversified away by investing in both AU Optronics and Emerging Display 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 Emerging Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AU Optronics and Emerging Display Technologies, you can compare the effects of market volatilities on AU Optronics and Emerging Display 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 Emerging Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of AU Optronics and Emerging Display.
Diversification Opportunities for AU Optronics and Emerging Display
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 2409 and Emerging is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding AU Optronics and Emerging Display Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Display Tec 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 Emerging Display. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Display Tec has no effect on the direction of AU Optronics i.e., AU Optronics and Emerging Display go up and down completely randomly.
Pair Corralation between AU Optronics and Emerging Display
Assuming the 90 days trading horizon AU Optronics is expected to generate 1.22 times more return on investment than Emerging Display. However, AU Optronics is 1.22 times more volatile than Emerging Display Technologies. It trades about -0.04 of its potential returns per unit of risk. Emerging Display Technologies is currently generating about -0.07 per unit of risk. If you would invest 1,800 in AU Optronics on September 3, 2024 and sell it today you would lose (240.00) from holding AU Optronics or give up 13.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AU Optronics vs. Emerging Display Technologies
Performance |
| Timeline |
| AU Optronics |
| Emerging Display Tec |
AU Optronics and Emerging Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AU Optronics and Emerging Display
The main advantage of trading using opposite AU Optronics and Emerging Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AU Optronics position performs unexpectedly, Emerging Display 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 Emerging Display will offset losses from the drop in Emerging Display's long position.| AU Optronics vs. Innolux Corp | AU Optronics vs. United Microelectronics | AU Optronics vs. China Steel Corp | AU Optronics vs. Quanta Computer |
| Emerging Display vs. Taiwan Semiconductor Manufacturing | Emerging Display vs. Yang Ming Marine | Emerging Display vs. ASE Industrial Holding | Emerging Display 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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