Correlation Between Deswell Industries and AU Optronics
Can any of the company-specific risk be diversified away by investing in both Deswell Industries 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 Deswell Industries and AU Optronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deswell Industries and AU Optronics Corp, you can compare the effects of market volatilities on Deswell Industries 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 Deswell Industries with a short position of AU Optronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deswell Industries and AU Optronics.
Diversification Opportunities for Deswell Industries and AU Optronics
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Deswell and AUOTY is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Deswell Industries and AU Optronics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AU Optronics Corp and Deswell Industries 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 Deswell Industries 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 Corp has no effect on the direction of Deswell Industries i.e., Deswell Industries and AU Optronics go up and down completely randomly.
Pair Corralation between Deswell Industries and AU Optronics
If you would invest 258.00 in Deswell Industries on August 28, 2024 and sell it today you would earn a total of 12.00 from holding Deswell Industries or generate 4.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
Deswell Industries vs. AU Optronics Corp
Performance |
| Timeline |
| Deswell Industries |
| AU Optronics Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Deswell Industries and AU Optronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deswell Industries and AU Optronics
The main advantage of trading using opposite Deswell Industries and AU Optronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deswell Industries 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.| Deswell Industries vs. Ieh Corp | Deswell Industries vs. LGL Group | Deswell Industries vs. Micropac Industries | Deswell Industries vs. SigmaTron International |
| AU Optronics vs. alpha En | AU Optronics vs. Alps Electric Co | AU Optronics vs. Bitmine Immersion Technologies | AU Optronics vs. American Aires |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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