Correlation Between AU Optronics and Lotes
Can any of the company-specific risk be diversified away by investing in both AU Optronics and Lotes 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 Lotes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AU Optronics and Lotes Co, you can compare the effects of market volatilities on AU Optronics and Lotes 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 Lotes. Check out your portfolio center. Please also check ongoing floating volatility patterns of AU Optronics and Lotes.
Diversification Opportunities for AU Optronics and Lotes
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 2409 and Lotes is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding AU Optronics and Lotes Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotes 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 Lotes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotes has no effect on the direction of AU Optronics i.e., AU Optronics and Lotes go up and down completely randomly.
Pair Corralation between AU Optronics and Lotes
Assuming the 90 days trading horizon AU Optronics is expected to generate 16.1 times less return on investment than Lotes. But when comparing it to its historical volatility, AU Optronics is 1.67 times less risky than Lotes. It trades about 0.01 of its potential returns per unit of risk. Lotes Co is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 101,000 in Lotes Co on September 14, 2024 and sell it today you would earn a total of 90,000 from holding Lotes Co or generate 89.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AU Optronics vs. Lotes Co
Performance |
| Timeline |
| AU Optronics |
| Lotes |
AU Optronics and Lotes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AU Optronics and Lotes
The main advantage of trading using opposite AU Optronics and Lotes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AU Optronics position performs unexpectedly, Lotes 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 Lotes will offset losses from the drop in Lotes' long position.| AU Optronics vs. Innolux Corp | AU Optronics vs. Ruentex Development Co | AU Optronics vs. WiseChip Semiconductor | AU Optronics vs. Novatek Microelectronics Corp |
| Lotes vs. AU Optronics | Lotes vs. Innolux Corp | Lotes vs. Ruentex Development Co | Lotes vs. WiseChip Semiconductor |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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