Correlation Between AU Optronics and Neo Neon
Can any of the company-specific risk be diversified away by investing in both AU Optronics and Neo Neon 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 Neo Neon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AU Optronics and Neo Neon Holdings Limited, you can compare the effects of market volatilities on AU Optronics and Neo Neon 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 Neo Neon. Check out your portfolio center. Please also check ongoing floating volatility patterns of AU Optronics and Neo Neon.
Diversification Opportunities for AU Optronics and Neo Neon
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between 2409 and Neo is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding AU Optronics and Neo Neon Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neo Neon 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 Neo Neon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neo Neon Holdings has no effect on the direction of AU Optronics i.e., AU Optronics and Neo Neon go up and down completely randomly.
Pair Corralation between AU Optronics and Neo Neon
Assuming the 90 days trading horizon AU Optronics is expected to under-perform the Neo Neon. But the stock apears to be less risky and, when comparing its historical volatility, AU Optronics is 1.69 times less risky than Neo Neon. The stock trades about -0.04 of its potential returns per unit of risk. The Neo Neon Holdings Limited is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 131.00 in Neo Neon Holdings Limited on September 5, 2024 and sell it today you would earn a total of 20.00 from holding Neo Neon Holdings Limited or generate 15.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
AU Optronics vs. Neo Neon Holdings Limited
Performance |
| Timeline |
| AU Optronics |
| Neo Neon Holdings |
AU Optronics and Neo Neon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AU Optronics and Neo Neon
The main advantage of trading using opposite AU Optronics and Neo Neon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AU Optronics position performs unexpectedly, Neo Neon 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 Neo Neon will offset losses from the drop in Neo Neon's long position.| AU Optronics vs. Innolux Corp | AU Optronics vs. United Microelectronics | AU Optronics vs. China Steel Corp | AU Optronics vs. Quanta Computer |
| Neo Neon vs. Hon Hai Precision | Neo Neon vs. Delta Electronics | Neo Neon vs. LARGAN Precision Co | Neo Neon 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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