Correlation Between AU Optronics and Aces Electronics
Can any of the company-specific risk be diversified away by investing in both AU Optronics and Aces 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 Aces 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 Aces Electronics Co, you can compare the effects of market volatilities on AU Optronics and Aces 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 Aces Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of AU Optronics and Aces Electronics.
Diversification Opportunities for AU Optronics and Aces Electronics
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between 2409 and Aces is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding AU Optronics and Aces Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aces 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 Aces Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aces Electronics has no effect on the direction of AU Optronics i.e., AU Optronics and Aces Electronics go up and down completely randomly.
Pair Corralation between AU Optronics and Aces Electronics
Assuming the 90 days trading horizon AU Optronics is expected to under-perform the Aces Electronics. In addition to that, AU Optronics is 1.39 times more volatile than Aces Electronics Co. It trades about -0.23 of its total potential returns per unit of risk. Aces Electronics Co is currently generating about -0.32 per unit of volatility. If you would invest 5,350 in Aces Electronics Co on October 12, 2024 and sell it today you would lose (540.00) from holding Aces Electronics Co or give up 10.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
AU Optronics vs. Aces Electronics Co
Performance |
| Timeline |
| AU Optronics |
| Aces Electronics |
AU Optronics and Aces Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AU Optronics and Aces Electronics
The main advantage of trading using opposite AU Optronics and Aces Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AU Optronics position performs unexpectedly, Aces 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 Aces Electronics will offset losses from the drop in Aces Electronics' long position.| AU Optronics vs. Innolux Corp | AU Optronics vs. United Microelectronics | AU Optronics vs. China Steel Corp | AU Optronics vs. Quanta Computer |
| Aces Electronics vs. Chant Sincere Co | Aces Electronics vs. Altek Corp | Aces Electronics vs. Jentech Precision Industrial | Aces Electronics vs. Lotes 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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