Correlation Between AU Optronics and TaiMed Biologics
Can any of the company-specific risk be diversified away by investing in both AU Optronics and TaiMed Biologics 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 TaiMed Biologics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AU Optronics and TaiMed Biologics, you can compare the effects of market volatilities on AU Optronics and TaiMed Biologics 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 TaiMed Biologics. Check out your portfolio center. Please also check ongoing floating volatility patterns of AU Optronics and TaiMed Biologics.
Diversification Opportunities for AU Optronics and TaiMed Biologics
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 2409 and TaiMed is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding AU Optronics and TaiMed Biologics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TaiMed Biologics 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 TaiMed Biologics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TaiMed Biologics has no effect on the direction of AU Optronics i.e., AU Optronics and TaiMed Biologics go up and down completely randomly.
Pair Corralation between AU Optronics and TaiMed Biologics
Assuming the 90 days trading horizon AU Optronics is expected to under-perform the TaiMed Biologics. But the stock apears to be less risky and, when comparing its historical volatility, AU Optronics is 1.01 times less risky than TaiMed Biologics. The stock trades about -0.04 of its potential returns per unit of risk. The TaiMed Biologics is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 9,030 in TaiMed Biologics on September 3, 2024 and sell it today you would lose (600.00) from holding TaiMed Biologics or give up 6.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AU Optronics vs. TaiMed Biologics
Performance |
| Timeline |
| AU Optronics |
| TaiMed Biologics |
AU Optronics and TaiMed Biologics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AU Optronics and TaiMed Biologics
The main advantage of trading using opposite AU Optronics and TaiMed Biologics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AU Optronics position performs unexpectedly, TaiMed Biologics 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 TaiMed Biologics will offset losses from the drop in TaiMed Biologics' long position.| AU Optronics vs. Innolux Corp | AU Optronics vs. United Microelectronics | AU Optronics vs. China Steel Corp | AU Optronics vs. Quanta Computer |
| TaiMed Biologics vs. Sinphar Pharmaceutical Co | TaiMed Biologics vs. WiseChip Semiconductor | TaiMed Biologics vs. Novatek Microelectronics Corp | TaiMed Biologics vs. Leader Electronics |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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