Correlation Between AU Optronics and E Ink
Can any of the company-specific risk be diversified away by investing in both AU Optronics and E Ink 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 E Ink into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AU Optronics and E Ink Holdings, you can compare the effects of market volatilities on AU Optronics and E Ink 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 E Ink. Check out your portfolio center. Please also check ongoing floating volatility patterns of AU Optronics and E Ink.
Diversification Opportunities for AU Optronics and E Ink
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 2409 and 8069 is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding AU Optronics and E Ink Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E Ink Holdings 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 E Ink. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E Ink Holdings has no effect on the direction of AU Optronics i.e., AU Optronics and E Ink go up and down completely randomly.
Pair Corralation between AU Optronics and E Ink
Assuming the 90 days trading horizon AU Optronics is expected to generate 316.57 times less return on investment than E Ink. But when comparing it to its historical volatility, AU Optronics is 1.35 times less risky than E Ink. It trades about 0.0 of its potential returns per unit of risk. E Ink Holdings is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 16,983 in E Ink Holdings on September 1, 2024 and sell it today you would earn a total of 11,117 from holding E Ink Holdings or generate 65.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AU Optronics vs. E Ink Holdings
Performance |
| Timeline |
| AU Optronics |
| E Ink Holdings |
AU Optronics and E Ink Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AU Optronics and E Ink
The main advantage of trading using opposite AU Optronics and E Ink positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AU Optronics position performs unexpectedly, E Ink 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 E Ink will offset losses from the drop in E Ink's long position.| AU Optronics vs. Innolux Corp | AU Optronics vs. United Microelectronics | AU Optronics vs. China Steel Corp | AU Optronics vs. Quanta Computer |
| E Ink vs. Hon Hai Precision | E Ink vs. Delta Electronics | E Ink vs. LARGAN Precision Co | E Ink vs. Yageo 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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