Correlation Between Wafer Works and AU Optronics
Can any of the company-specific risk be diversified away by investing in both Wafer Works 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 Wafer Works and AU Optronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wafer Works and AU Optronics, you can compare the effects of market volatilities on Wafer Works 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 Wafer Works with a short position of AU Optronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wafer Works and AU Optronics.
Diversification Opportunities for Wafer Works and AU Optronics
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Wafer and 2409 is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Wafer Works and AU Optronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AU Optronics and Wafer Works 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 Wafer Works 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 Wafer Works i.e., Wafer Works and AU Optronics go up and down completely randomly.
Pair Corralation between Wafer Works and AU Optronics
Assuming the 90 days trading horizon Wafer Works is expected to generate 1.13 times more return on investment than AU Optronics. However, Wafer Works is 1.13 times more volatile than AU Optronics. It trades about -0.02 of its potential returns per unit of risk. AU Optronics is currently generating about -0.23 per unit of risk. If you would invest 3,065 in Wafer Works on August 26, 2024 and sell it today you would lose (40.00) from holding Wafer Works or give up 1.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wafer Works vs. AU Optronics
Performance |
| Timeline |
| Wafer Works |
| AU Optronics |
Wafer Works and AU Optronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wafer Works and AU Optronics
The main advantage of trading using opposite Wafer Works and AU Optronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wafer Works 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.| Wafer Works vs. Sino American Silicon Products | Wafer Works vs. GlobalWafers Co | Wafer Works vs. Motech Industries Co | Wafer Works vs. Formosa Sumco Technology |
| 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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