Correlation Between AU Optronics and Generalplus Technology
Can any of the company-specific risk be diversified away by investing in both AU Optronics and Generalplus Technology 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 Generalplus Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AU Optronics and Generalplus Technology, you can compare the effects of market volatilities on AU Optronics and Generalplus Technology 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 Generalplus Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of AU Optronics and Generalplus Technology.
Diversification Opportunities for AU Optronics and Generalplus Technology
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 2409 and Generalplus is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding AU Optronics and Generalplus Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Generalplus Technology 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 Generalplus Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Generalplus Technology has no effect on the direction of AU Optronics i.e., AU Optronics and Generalplus Technology go up and down completely randomly.
Pair Corralation between AU Optronics and Generalplus Technology
Assuming the 90 days trading horizon AU Optronics is expected to generate 0.81 times more return on investment than Generalplus Technology. However, AU Optronics is 1.24 times less risky than Generalplus Technology. It trades about -0.04 of its potential returns per unit of risk. Generalplus Technology is currently generating about -0.08 per unit of risk. If you would invest 1,805 in AU Optronics on September 5, 2024 and sell it today you would lose (205.00) from holding AU Optronics or give up 11.36% 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. Generalplus Technology
Performance |
| Timeline |
| AU Optronics |
| Generalplus Technology |
AU Optronics and Generalplus Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AU Optronics and Generalplus Technology
The main advantage of trading using opposite AU Optronics and Generalplus Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AU Optronics position performs unexpectedly, Generalplus Technology 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 Generalplus Technology will offset losses from the drop in Generalplus Technology's long position.| AU Optronics vs. Innolux Corp | AU Optronics vs. United Microelectronics | AU Optronics vs. China Steel Corp | AU Optronics vs. Quanta Computer |
| Generalplus Technology vs. Taiwan Semiconductor Manufacturing | Generalplus Technology vs. Yang Ming Marine | Generalplus Technology vs. AU Optronics | Generalplus Technology vs. Nan Ya Plastics |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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