Correlation Between Sino American and AU Optronics
Can any of the company-specific risk be diversified away by investing in both Sino American 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 Sino American and AU Optronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sino American Silicon Products and AU Optronics, you can compare the effects of market volatilities on Sino American 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 Sino American with a short position of AU Optronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sino American and AU Optronics.
Diversification Opportunities for Sino American and AU Optronics
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sino and 2409 is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Sino American Silicon Products and AU Optronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AU Optronics and Sino American 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 Sino American Silicon Products 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 Sino American i.e., Sino American and AU Optronics go up and down completely randomly.
Pair Corralation between Sino American and AU Optronics
Assuming the 90 days trading horizon Sino American Silicon Products is expected to generate 0.94 times more return on investment than AU Optronics. However, Sino American Silicon Products is 1.06 times less risky than AU Optronics. It trades about 0.02 of its potential returns per unit of risk. AU Optronics is currently generating about 0.01 per unit of risk. If you would invest 14,438 in Sino American Silicon Products on August 30, 2024 and sell it today you would earn a total of 1,462 from holding Sino American Silicon Products or generate 10.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sino American Silicon Products vs. AU Optronics
Performance |
| Timeline |
| Sino American Silicon |
| AU Optronics |
Sino American and AU Optronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sino American and AU Optronics
The main advantage of trading using opposite Sino American and AU Optronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sino American 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.| Sino American vs. Powertech Technology | Sino American vs. Formosa Sumco Technology | Sino American vs. Radiant Opto Electronics Corp | Sino American vs. Faraday Technology Corp |
| 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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