Correlation Between AU Optronics and Information Technology
Can any of the company-specific risk be diversified away by investing in both AU Optronics and Information 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 Information 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 Information Technology Total, you can compare the effects of market volatilities on AU Optronics and Information 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 Information Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of AU Optronics and Information Technology.
Diversification Opportunities for AU Optronics and Information Technology
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 2409 and Information is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding AU Optronics and Information Technology Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Information 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 Information Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Information Technology has no effect on the direction of AU Optronics i.e., AU Optronics and Information Technology go up and down completely randomly.
Pair Corralation between AU Optronics and Information Technology
Assuming the 90 days trading horizon AU Optronics is expected to generate 9.29 times less return on investment than Information Technology. But when comparing it to its historical volatility, AU Optronics is 1.1 times less risky than Information Technology. It trades about 0.0 of its potential returns per unit of risk. Information Technology Total is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 4,697 in Information Technology Total on September 14, 2024 and sell it today you would lose (12.00) from holding Information Technology Total or give up 0.26% 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. Information Technology Total
Performance |
| Timeline |
| AU Optronics |
| Information Technology |
AU Optronics and Information Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AU Optronics and Information Technology
The main advantage of trading using opposite AU Optronics and Information Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AU Optronics position performs unexpectedly, Information 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 Information Technology will offset losses from the drop in Information Technology's long position.| AU Optronics vs. Innolux Corp | AU Optronics vs. Ruentex Development Co | AU Optronics vs. WiseChip Semiconductor | AU Optronics vs. Novatek Microelectronics 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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