Correlation Between AU Optronics and Rafael Microelectronics
Can any of the company-specific risk be diversified away by investing in both AU Optronics and Rafael Microelectronics 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 Rafael Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AU Optronics and Rafael Microelectronics, you can compare the effects of market volatilities on AU Optronics and Rafael Microelectronics 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 Rafael Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of AU Optronics and Rafael Microelectronics.
Diversification Opportunities for AU Optronics and Rafael Microelectronics
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 2409 and Rafael is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding AU Optronics and Rafael Microelectronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rafael Microelectronics 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 Rafael Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rafael Microelectronics has no effect on the direction of AU Optronics i.e., AU Optronics and Rafael Microelectronics go up and down completely randomly.
Pair Corralation between AU Optronics and Rafael Microelectronics
Assuming the 90 days trading horizon AU Optronics is expected to generate 0.7 times more return on investment than Rafael Microelectronics. However, AU Optronics is 1.44 times less risky than Rafael Microelectronics. It trades about -0.03 of its potential returns per unit of risk. Rafael Microelectronics is currently generating about -0.02 per unit of risk. If you would invest 1,590 in AU Optronics on September 13, 2024 and sell it today you would lose (15.00) from holding AU Optronics or give up 0.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AU Optronics vs. Rafael Microelectronics
Performance |
| Timeline |
| AU Optronics |
| Rafael Microelectronics |
AU Optronics and Rafael Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AU Optronics and Rafael Microelectronics
The main advantage of trading using opposite AU Optronics and Rafael Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AU Optronics position performs unexpectedly, Rafael Microelectronics 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 Rafael Microelectronics will offset losses from the drop in Rafael Microelectronics' long position.| AU Optronics vs. Innolux Corp | AU Optronics vs. United Microelectronics | AU Optronics vs. China Steel Corp | AU Optronics vs. Quanta Computer |
| Rafael Microelectronics vs. AU Optronics | Rafael Microelectronics vs. Innolux Corp | Rafael Microelectronics vs. Ruentex Development Co | Rafael Microelectronics vs. WiseChip Semiconductor |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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