Correlation Between AU Optronics and Ingentec
Can any of the company-specific risk be diversified away by investing in both AU Optronics and Ingentec 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 Ingentec into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AU Optronics and Ingentec, you can compare the effects of market volatilities on AU Optronics and Ingentec 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 Ingentec. Check out your portfolio center. Please also check ongoing floating volatility patterns of AU Optronics and Ingentec.
Diversification Opportunities for AU Optronics and Ingentec
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 2409 and Ingentec is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding AU Optronics and Ingentec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ingentec 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 Ingentec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ingentec has no effect on the direction of AU Optronics i.e., AU Optronics and Ingentec go up and down completely randomly.
Pair Corralation between AU Optronics and Ingentec
Assuming the 90 days trading horizon AU Optronics is expected to under-perform the Ingentec. But the stock apears to be less risky and, when comparing its historical volatility, AU Optronics is 1.76 times less risky than Ingentec. The stock trades about -0.02 of its potential returns per unit of risk. The Ingentec is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 19,539 in Ingentec on September 1, 2024 and sell it today you would lose (139.00) from holding Ingentec or give up 0.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AU Optronics vs. Ingentec
Performance |
| Timeline |
| AU Optronics |
| Ingentec |
AU Optronics and Ingentec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AU Optronics and Ingentec
The main advantage of trading using opposite AU Optronics and Ingentec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AU Optronics position performs unexpectedly, Ingentec 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 Ingentec will offset losses from the drop in Ingentec's long position.| AU Optronics vs. Innolux Corp | AU Optronics vs. United Microelectronics | AU Optronics vs. China Steel Corp | AU Optronics vs. Quanta Computer |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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