Correlation Between AU Optronics and Ruentex Development
Can any of the company-specific risk be diversified away by investing in both AU Optronics and Ruentex Development 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 Ruentex Development into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AU Optronics and Ruentex Development Co, you can compare the effects of market volatilities on AU Optronics and Ruentex Development 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 Ruentex Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of AU Optronics and Ruentex Development.
Diversification Opportunities for AU Optronics and Ruentex Development
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between 2409 and Ruentex is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding AU Optronics and Ruentex Development Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ruentex Development 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 Ruentex Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ruentex Development has no effect on the direction of AU Optronics i.e., AU Optronics and Ruentex Development go up and down completely randomly.
Pair Corralation between AU Optronics and Ruentex Development
Assuming the 90 days trading horizon AU Optronics is expected to generate 55.29 times less return on investment than Ruentex Development. But when comparing it to its historical volatility, AU Optronics is 1.07 times less risky than Ruentex Development. It trades about 0.0 of its potential returns per unit of risk. Ruentex Development Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 3,580 in Ruentex Development Co on September 14, 2024 and sell it today you would earn a total of 1,040 from holding Ruentex Development Co or generate 29.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.62% |
| Values | Daily Returns |
AU Optronics vs. Ruentex Development Co
Performance |
| Timeline |
| AU Optronics |
| Ruentex Development |
AU Optronics and Ruentex Development Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AU Optronics and Ruentex Development
The main advantage of trading using opposite AU Optronics and Ruentex Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AU Optronics position performs unexpectedly, Ruentex Development 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 Ruentex Development will offset losses from the drop in Ruentex Development'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 |
| Ruentex Development vs. Ruentex Industries | Ruentex Development vs. Pou Chen Corp | Ruentex Development vs. Fubon Financial Holding | Ruentex Development vs. Cathay Financial Holding |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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