Correlation Between AU Optronics and Te Chang
Can any of the company-specific risk be diversified away by investing in both AU Optronics and Te Chang 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 Te Chang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AU Optronics and Te Chang Construction, you can compare the effects of market volatilities on AU Optronics and Te Chang 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 Te Chang. Check out your portfolio center. Please also check ongoing floating volatility patterns of AU Optronics and Te Chang.
Diversification Opportunities for AU Optronics and Te Chang
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 2409 and 5511 is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding AU Optronics and Te Chang Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Te Chang Construction 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 Te Chang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Te Chang Construction has no effect on the direction of AU Optronics i.e., AU Optronics and Te Chang go up and down completely randomly.
Pair Corralation between AU Optronics and Te Chang
Assuming the 90 days trading horizon AU Optronics is expected to under-perform the Te Chang. In addition to that, AU Optronics is 1.78 times more volatile than Te Chang Construction. It trades about -0.15 of its total potential returns per unit of risk. Te Chang Construction is currently generating about 0.0 per unit of volatility. If you would invest 6,180 in Te Chang Construction on September 1, 2024 and sell it today you would earn a total of 0.00 from holding Te Chang Construction or generate 0.0% 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. Te Chang Construction
Performance |
| Timeline |
| AU Optronics |
| Te Chang Construction |
AU Optronics and Te Chang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AU Optronics and Te Chang
The main advantage of trading using opposite AU Optronics and Te Chang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AU Optronics position performs unexpectedly, Te Chang 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 Te Chang will offset losses from the drop in Te Chang's long position.| AU Optronics vs. Innolux Corp | AU Optronics vs. United Microelectronics | AU Optronics vs. China Steel Corp | AU Optronics vs. Quanta Computer |
| Te Chang vs. Ruentex Development Co | Te Chang vs. United Integrated Services | Te Chang vs. CTCI Corp | Te Chang vs. Continental Holdings Corp |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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