Correlation Between AU Optronics and Info Tek
Can any of the company-specific risk be diversified away by investing in both AU Optronics and Info Tek 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 Info Tek into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AU Optronics and Info Tek, you can compare the effects of market volatilities on AU Optronics and Info Tek 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 Info Tek. Check out your portfolio center. Please also check ongoing floating volatility patterns of AU Optronics and Info Tek.
Diversification Opportunities for AU Optronics and Info Tek
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between 2409 and Info is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding AU Optronics and Info Tek in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Info Tek 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 Info Tek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Info Tek has no effect on the direction of AU Optronics i.e., AU Optronics and Info Tek go up and down completely randomly.
Pair Corralation between AU Optronics and Info Tek
Assuming the 90 days trading horizon AU Optronics is expected to under-perform the Info Tek. But the stock apears to be less risky and, when comparing its historical volatility, AU Optronics is 1.29 times less risky than Info Tek. The stock trades about -0.09 of its potential returns per unit of risk. The Info Tek is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 4,200 in Info Tek on September 12, 2024 and sell it today you would lose (70.00) from holding Info Tek or give up 1.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AU Optronics vs. Info Tek
Performance |
| Timeline |
| AU Optronics |
| Info Tek |
AU Optronics and Info Tek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AU Optronics and Info Tek
The main advantage of trading using opposite AU Optronics and Info Tek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AU Optronics position performs unexpectedly, Info Tek 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 Info Tek will offset losses from the drop in Info Tek'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 |
| Info Tek vs. Compeq Manufacturing Co | Info Tek vs. Global Brands Manufacture | Info Tek vs. HannStar Board Corp | Info Tek vs. Taiwan Hopax Chemsistry |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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