Correlation Between Wah Lee and AU Optronics
Can any of the company-specific risk be diversified away by investing in both Wah Lee 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 Wah Lee and AU Optronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wah Lee Industrial and AU Optronics, you can compare the effects of market volatilities on Wah Lee 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 Wah Lee with a short position of AU Optronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wah Lee and AU Optronics.
Diversification Opportunities for Wah Lee and AU Optronics
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Wah and 2409 is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Wah Lee Industrial and AU Optronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AU Optronics and Wah Lee 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 Wah Lee Industrial 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 Wah Lee i.e., Wah Lee and AU Optronics go up and down completely randomly.
Pair Corralation between Wah Lee and AU Optronics
Assuming the 90 days trading horizon Wah Lee Industrial is expected to generate 1.31 times more return on investment than AU Optronics. However, Wah Lee is 1.31 times more volatile than AU Optronics. It trades about 0.16 of its potential returns per unit of risk. AU Optronics is currently generating about -0.03 per unit of risk. If you would invest 12,200 in Wah Lee Industrial on September 13, 2024 and sell it today you would earn a total of 650.00 from holding Wah Lee Industrial or generate 5.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wah Lee Industrial vs. AU Optronics
Performance |
| Timeline |
| Wah Lee Industrial |
| AU Optronics |
Wah Lee and AU Optronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wah Lee and AU Optronics
The main advantage of trading using opposite Wah Lee and AU Optronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wah Lee 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.| Wah Lee vs. AU Optronics | Wah Lee vs. Innolux Corp | Wah Lee vs. Ruentex Development Co | Wah Lee vs. WiseChip Semiconductor |
| AU Optronics vs. Innolux Corp | AU Optronics vs. United Microelectronics | AU Optronics vs. China Steel Corp | AU Optronics vs. Quanta Computer |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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