Correlation Between AU Optronics and Leader Electronics
Can any of the company-specific risk be diversified away by investing in both AU Optronics and Leader Electronics 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 Leader Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AU Optronics and Leader Electronics, you can compare the effects of market volatilities on AU Optronics and Leader Electronics 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 Leader Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of AU Optronics and Leader Electronics.
Diversification Opportunities for AU Optronics and Leader Electronics
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 2409 and Leader is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding AU Optronics and Leader Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leader Electronics 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 Leader Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leader Electronics has no effect on the direction of AU Optronics i.e., AU Optronics and Leader Electronics go up and down completely randomly.
Pair Corralation between AU Optronics and Leader Electronics
Assuming the 90 days trading horizon AU Optronics is expected to generate 0.77 times more return on investment than Leader Electronics. However, AU Optronics is 1.3 times less risky than Leader Electronics. It trades about 0.0 of its potential returns per unit of risk. Leader Electronics is currently generating about -0.02 per unit of risk. If you would invest 1,640 in AU Optronics on September 14, 2024 and sell it today you would lose (65.00) from holding AU Optronics or give up 3.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AU Optronics vs. Leader Electronics
Performance |
| Timeline |
| AU Optronics |
| Leader Electronics |
AU Optronics and Leader Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AU Optronics and Leader Electronics
The main advantage of trading using opposite AU Optronics and Leader Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AU Optronics position performs unexpectedly, Leader Electronics 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 Leader Electronics will offset losses from the drop in Leader Electronics' long position.| AU Optronics vs. Innolux Corp | AU Optronics vs. Ruentex Development Co | AU Optronics vs. WiseChip Semiconductor | AU Optronics vs. Novatek Microelectronics Corp |
| Leader Electronics vs. Yang Ming Marine | Leader Electronics vs. Wan Hai Lines | Leader Electronics vs. U Ming Marine Transport | Leader Electronics vs. Taiwan Navigation Co |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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