Correlation Between AU Optronics and Great Taipei
Can any of the company-specific risk be diversified away by investing in both AU Optronics and Great Taipei 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 Great Taipei into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AU Optronics and Great Taipei Gas, you can compare the effects of market volatilities on AU Optronics and Great Taipei 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 Great Taipei. Check out your portfolio center. Please also check ongoing floating volatility patterns of AU Optronics and Great Taipei.
Diversification Opportunities for AU Optronics and Great Taipei
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between 2409 and Great is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding AU Optronics and Great Taipei Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Taipei Gas 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 Great Taipei. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Taipei Gas has no effect on the direction of AU Optronics i.e., AU Optronics and Great Taipei go up and down completely randomly.
Pair Corralation between AU Optronics and Great Taipei
Assuming the 90 days trading horizon AU Optronics is expected to generate 5.06 times more return on investment than Great Taipei. However, AU Optronics is 5.06 times more volatile than Great Taipei Gas. It trades about 0.0 of its potential returns per unit of risk. Great Taipei Gas is currently generating about -0.09 per unit of risk. If you would invest 1,640 in AU Optronics on September 14, 2024 and sell it today you would lose (65.00) from holding AU Optronics or give up 3.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AU Optronics vs. Great Taipei Gas
Performance |
| Timeline |
| AU Optronics |
| Great Taipei Gas |
AU Optronics and Great Taipei Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AU Optronics and Great Taipei
The main advantage of trading using opposite AU Optronics and Great Taipei positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AU Optronics position performs unexpectedly, Great Taipei 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 Great Taipei will offset losses from the drop in Great Taipei'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 |
| Great Taipei vs. Taiwan Secom Co | Great Taipei vs. Taiwan Shin Kong | Great Taipei vs. Taiwan Cogeneration Corp | Great Taipei vs. Ruentex Development Co |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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