Correlation Between Creative Sensor and AU Optronics
Can any of the company-specific risk be diversified away by investing in both Creative Sensor 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 Creative Sensor and AU Optronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Creative Sensor and AU Optronics, you can compare the effects of market volatilities on Creative Sensor 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 Creative Sensor with a short position of AU Optronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Creative Sensor and AU Optronics.
Diversification Opportunities for Creative Sensor and AU Optronics
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Creative and 2409 is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Creative Sensor and AU Optronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AU Optronics and Creative Sensor 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 Creative Sensor 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 Creative Sensor i.e., Creative Sensor and AU Optronics go up and down completely randomly.
Pair Corralation between Creative Sensor and AU Optronics
Assuming the 90 days trading horizon Creative Sensor is expected to under-perform the AU Optronics. In addition to that, Creative Sensor is 2.39 times more volatile than AU Optronics. It trades about -0.33 of its total potential returns per unit of risk. AU Optronics is currently generating about 0.05 per unit of volatility. If you would invest 1,585 in AU Optronics on September 14, 2024 and sell it today you would earn a total of 20.00 from holding AU Optronics or generate 1.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Creative Sensor vs. AU Optronics
Performance |
| Timeline |
| Creative Sensor |
| AU Optronics |
Creative Sensor and AU Optronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Creative Sensor and AU Optronics
The main advantage of trading using opposite Creative Sensor and AU Optronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Creative Sensor 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.| Creative Sensor vs. AU Optronics | Creative Sensor vs. Innolux Corp | Creative Sensor vs. Ruentex Development Co | Creative Sensor 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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