Correlation Between Innolux Corp and AzureWave Technologies
Can any of the company-specific risk be diversified away by investing in both Innolux Corp and AzureWave Technologies 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 Innolux Corp and AzureWave Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innolux Corp and AzureWave Technologies, you can compare the effects of market volatilities on Innolux Corp and AzureWave Technologies 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 Innolux Corp with a short position of AzureWave Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innolux Corp and AzureWave Technologies.
Diversification Opportunities for Innolux Corp and AzureWave Technologies
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Innolux and AzureWave is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Innolux Corp and AzureWave Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AzureWave Technologies and Innolux Corp 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 Innolux Corp are associated (or correlated) with AzureWave Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AzureWave Technologies has no effect on the direction of Innolux Corp i.e., Innolux Corp and AzureWave Technologies go up and down completely randomly.
Pair Corralation between Innolux Corp and AzureWave Technologies
Assuming the 90 days trading horizon Innolux Corp is expected to generate 7.54 times less return on investment than AzureWave Technologies. But when comparing it to its historical volatility, Innolux Corp is 2.77 times less risky than AzureWave Technologies. It trades about 0.11 of its potential returns per unit of risk. AzureWave Technologies is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 4,230 in AzureWave Technologies on September 14, 2024 and sell it today you would earn a total of 1,160 from holding AzureWave Technologies or generate 27.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innolux Corp vs. AzureWave Technologies
Performance |
| Timeline |
| Innolux Corp |
| AzureWave Technologies |
Innolux Corp and AzureWave Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innolux Corp and AzureWave Technologies
The main advantage of trading using opposite Innolux Corp and AzureWave Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innolux Corp position performs unexpectedly, AzureWave Technologies 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 AzureWave Technologies will offset losses from the drop in AzureWave Technologies' long position.| Innolux Corp vs. AU Optronics | Innolux Corp vs. China Steel Corp | Innolux Corp vs. Hon Hai Precision | Innolux Corp vs. Delta Electronics |
| AzureWave Technologies vs. AU Optronics | AzureWave Technologies vs. Innolux Corp | AzureWave Technologies vs. Ruentex Development Co | AzureWave Technologies vs. WiseChip Semiconductor |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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