Correlation Between AU Optronics and Walton Advanced
Can any of the company-specific risk be diversified away by investing in both AU Optronics and Walton Advanced 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 Walton Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AU Optronics and Walton Advanced Engineering, you can compare the effects of market volatilities on AU Optronics and Walton Advanced 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 Walton Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of AU Optronics and Walton Advanced.
Diversification Opportunities for AU Optronics and Walton Advanced
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 2409 and Walton is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding AU Optronics and Walton Advanced Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walton Advanced Engi 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 Walton Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walton Advanced Engi has no effect on the direction of AU Optronics i.e., AU Optronics and Walton Advanced go up and down completely randomly.
Pair Corralation between AU Optronics and Walton Advanced
Assuming the 90 days trading horizon AU Optronics is expected to generate 1.01 times more return on investment than Walton Advanced. However, AU Optronics is 1.01 times more volatile than Walton Advanced Engineering. It trades about 0.0 of its potential returns per unit of risk. Walton Advanced Engineering is currently generating about -0.08 per unit of risk. If you would invest 1,605 in AU Optronics on September 5, 2024 and sell it today you would lose (5.00) from holding AU Optronics or give up 0.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AU Optronics vs. Walton Advanced Engineering
Performance |
| Timeline |
| AU Optronics |
| Walton Advanced Engi |
AU Optronics and Walton Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AU Optronics and Walton Advanced
The main advantage of trading using opposite AU Optronics and Walton Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AU Optronics position performs unexpectedly, Walton Advanced 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 Walton Advanced will offset losses from the drop in Walton Advanced's long position.| AU Optronics vs. Innolux Corp | AU Optronics vs. United Microelectronics | AU Optronics vs. China Steel Corp | AU Optronics vs. Quanta Computer |
| Walton Advanced vs. Taiwan Semiconductor Manufacturing | Walton Advanced vs. Yang Ming Marine | Walton Advanced vs. AU Optronics | Walton Advanced vs. Nan Ya Plastics |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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