Correlation Between AU Optronics and GeoVision
Can any of the company-specific risk be diversified away by investing in both AU Optronics and GeoVision 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 GeoVision into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AU Optronics and GeoVision, you can compare the effects of market volatilities on AU Optronics and GeoVision 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 GeoVision. Check out your portfolio center. Please also check ongoing floating volatility patterns of AU Optronics and GeoVision.
Diversification Opportunities for AU Optronics and GeoVision
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between 2409 and GeoVision is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding AU Optronics and GeoVision in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GeoVision 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 GeoVision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GeoVision has no effect on the direction of AU Optronics i.e., AU Optronics and GeoVision go up and down completely randomly.
Pair Corralation between AU Optronics and GeoVision
Assuming the 90 days trading horizon AU Optronics is expected to under-perform the GeoVision. But the stock apears to be less risky and, when comparing its historical volatility, AU Optronics is 1.44 times less risky than GeoVision. The stock trades about -0.01 of its potential returns per unit of risk. The GeoVision is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 4,480 in GeoVision on September 4, 2024 and sell it today you would earn a total of 1,240 from holding GeoVision or generate 27.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AU Optronics vs. GeoVision
Performance |
| Timeline |
| AU Optronics |
| GeoVision |
AU Optronics and GeoVision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AU Optronics and GeoVision
The main advantage of trading using opposite AU Optronics and GeoVision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AU Optronics position performs unexpectedly, GeoVision 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 GeoVision will offset losses from the drop in GeoVision's long position.| AU Optronics vs. Innolux Corp | AU Optronics vs. United Microelectronics | AU Optronics vs. China Steel Corp | AU Optronics vs. Quanta Computer |
| GeoVision vs. Taiwan Semiconductor Manufacturing | GeoVision vs. Yang Ming Marine | GeoVision vs. ASE Industrial Holding | GeoVision 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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