Correlation Between Lelon Electronics and AU Optronics
Can any of the company-specific risk be diversified away by investing in both Lelon Electronics and AU Optronics 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 Lelon Electronics and AU Optronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lelon Electronics Corp and AU Optronics, you can compare the effects of market volatilities on Lelon Electronics and AU Optronics 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 Lelon Electronics with a short position of AU Optronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lelon Electronics and AU Optronics.
Diversification Opportunities for Lelon Electronics and AU Optronics
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lelon and 2409 is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Lelon Electronics Corp and AU Optronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AU Optronics and Lelon Electronics 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 Lelon Electronics Corp are associated (or correlated) with AU Optronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AU Optronics has no effect on the direction of Lelon Electronics i.e., Lelon Electronics and AU Optronics go up and down completely randomly.
Pair Corralation between Lelon Electronics and AU Optronics
Assuming the 90 days trading horizon Lelon Electronics Corp is expected to generate 2.33 times more return on investment than AU Optronics. However, Lelon Electronics is 2.33 times more volatile than AU Optronics. It trades about 0.21 of its potential returns per unit of risk. AU Optronics is currently generating about -0.13 per unit of risk. If you would invest 7,450 in Lelon Electronics Corp on September 12, 2024 and sell it today you would earn a total of 990.00 from holding Lelon Electronics Corp or generate 13.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lelon Electronics Corp vs. AU Optronics
Performance |
| Timeline |
| Lelon Electronics Corp |
| AU Optronics |
Lelon Electronics and AU Optronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lelon Electronics and AU Optronics
The main advantage of trading using opposite Lelon Electronics and AU Optronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lelon Electronics position performs unexpectedly, AU Optronics 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 AU Optronics will offset losses from the drop in AU Optronics' long position.| Lelon Electronics vs. AU Optronics | Lelon Electronics vs. Innolux Corp | Lelon Electronics vs. Ruentex Development Co | Lelon Electronics vs. WiseChip Semiconductor |
| AU Optronics vs. Innolux Corp | AU Optronics vs. Ruentex Development Co | AU Optronics vs. WiseChip Semiconductor | AU Optronics vs. Novatek Microelectronics Corp |
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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