Correlation Between AU Optronics and ABC Taiwan
Can any of the company-specific risk be diversified away by investing in both AU Optronics and ABC Taiwan 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 ABC Taiwan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AU Optronics and ABC Taiwan Electronics, you can compare the effects of market volatilities on AU Optronics and ABC Taiwan 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 ABC Taiwan. Check out your portfolio center. Please also check ongoing floating volatility patterns of AU Optronics and ABC Taiwan.
Diversification Opportunities for AU Optronics and ABC Taiwan
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between 2409 and ABC is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding AU Optronics and ABC Taiwan Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABC Taiwan 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 ABC Taiwan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABC Taiwan Electronics has no effect on the direction of AU Optronics i.e., AU Optronics and ABC Taiwan go up and down completely randomly.
Pair Corralation between AU Optronics and ABC Taiwan
Assuming the 90 days trading horizon AU Optronics is expected to generate 1.07 times more return on investment than ABC Taiwan. However, AU Optronics is 1.07 times more volatile than ABC Taiwan Electronics. It trades about 0.01 of its potential returns per unit of risk. ABC Taiwan Electronics is currently generating about 0.0 per unit of risk. If you would invest 1,484 in AU Optronics on September 3, 2024 and sell it today you would earn a total of 76.00 from holding AU Optronics or generate 5.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AU Optronics vs. ABC Taiwan Electronics
Performance |
| Timeline |
| AU Optronics |
| ABC Taiwan Electronics |
AU Optronics and ABC Taiwan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AU Optronics and ABC Taiwan
The main advantage of trading using opposite AU Optronics and ABC Taiwan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AU Optronics position performs unexpectedly, ABC Taiwan 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 ABC Taiwan will offset losses from the drop in ABC Taiwan's long position.| AU Optronics vs. Innolux Corp | AU Optronics vs. United Microelectronics | AU Optronics vs. China Steel Corp | AU Optronics vs. Quanta Computer |
| ABC Taiwan vs. Hon Hai Precision | ABC Taiwan vs. Delta Electronics | ABC Taiwan vs. LARGAN Precision Co | ABC Taiwan 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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