Correlation Between AU Optronics and Topoint Technology
Can any of the company-specific risk be diversified away by investing in both AU Optronics and Topoint 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 Topoint 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 Topoint Technology Co, you can compare the effects of market volatilities on AU Optronics and Topoint 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 Topoint Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of AU Optronics and Topoint Technology.
Diversification Opportunities for AU Optronics and Topoint Technology
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 2409 and Topoint is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding AU Optronics and Topoint Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Topoint 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 Topoint Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Topoint Technology has no effect on the direction of AU Optronics i.e., AU Optronics and Topoint Technology go up and down completely randomly.
Pair Corralation between AU Optronics and Topoint Technology
Assuming the 90 days trading horizon AU Optronics is expected to generate 2.01 times less return on investment than Topoint Technology. But when comparing it to its historical volatility, AU Optronics is 1.05 times less risky than Topoint Technology. It trades about 0.01 of its potential returns per unit of risk. Topoint Technology Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,766 in Topoint Technology Co on September 3, 2024 and sell it today you would earn a total of 534.00 from holding Topoint Technology Co or generate 19.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
AU Optronics vs. Topoint Technology Co
Performance |
| Timeline |
| AU Optronics |
| Topoint Technology |
AU Optronics and Topoint Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AU Optronics and Topoint Technology
The main advantage of trading using opposite AU Optronics and Topoint Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AU Optronics position performs unexpectedly, Topoint 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 Topoint Technology will offset losses from the drop in Topoint 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 |
| Topoint Technology vs. Taiwan Semiconductor Manufacturing | Topoint Technology vs. Yang Ming Marine | Topoint Technology vs. ASE Industrial Holding | Topoint Technology vs. AU Optronics |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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