Correlation Between AU Optronics and Wah Hong
Can any of the company-specific risk be diversified away by investing in both AU Optronics and Wah Hong 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 Wah Hong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AU Optronics and Wah Hong Industrial, you can compare the effects of market volatilities on AU Optronics and Wah Hong 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 Wah Hong. Check out your portfolio center. Please also check ongoing floating volatility patterns of AU Optronics and Wah Hong.
Diversification Opportunities for AU Optronics and Wah Hong
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between 2409 and Wah is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding AU Optronics and Wah Hong Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wah Hong Industrial 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 Wah Hong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wah Hong Industrial has no effect on the direction of AU Optronics i.e., AU Optronics and Wah Hong go up and down completely randomly.
Pair Corralation between AU Optronics and Wah Hong
Assuming the 90 days trading horizon AU Optronics is expected to generate 4.95 times less return on investment than Wah Hong. But when comparing it to its historical volatility, AU Optronics is 1.17 times less risky than Wah Hong. It trades about 0.01 of its potential returns per unit of risk. Wah Hong Industrial is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,695 in Wah Hong Industrial on September 3, 2024 and sell it today you would earn a total of 1,975 from holding Wah Hong Industrial or generate 73.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AU Optronics vs. Wah Hong Industrial
Performance |
| Timeline |
| AU Optronics |
| Wah Hong Industrial |
AU Optronics and Wah Hong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AU Optronics and Wah Hong
The main advantage of trading using opposite AU Optronics and Wah Hong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AU Optronics position performs unexpectedly, Wah Hong 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 Wah Hong will offset losses from the drop in Wah Hong's long position.| AU Optronics vs. Innolux Corp | AU Optronics vs. United Microelectronics | AU Optronics vs. China Steel Corp | AU Optronics vs. Quanta Computer |
| Wah Hong vs. Hon Hai Precision | Wah Hong vs. Delta Electronics | Wah Hong vs. LARGAN Precision Co | Wah Hong 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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