Correlation Between AU Optronics and Sun Race

Can any of the company-specific risk be diversified away by investing in both AU Optronics and Sun Race 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 AU Optronics and Sun Race into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AU Optronics and Sun Race Sturmey Archer, you can compare the effects of market volatilities on AU Optronics and Sun Race 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 AU Optronics with a short position of Sun Race. Check out your portfolio center. Please also check ongoing floating volatility patterns of AU Optronics and Sun Race.

Diversification Opportunities for AU Optronics and Sun Race

0.55

Correlation Coefficient

AU Optronics  Sun Race

Very weak diversification

The 3 months correlation between 2409 and Sun is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding AU Optronics and Sun Race Sturmey Archer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Race Sturmey and AU Optronics 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 AU Optronics are associated (or correlated) with Sun Race. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Race Sturmey has no effect on the direction of AU Optronics i.e., AU Optronics and Sun Race go up and down completely randomly.

Pair Corralation between AU Optronics and Sun Race

Assuming the 90 days trading horizon AU Optronics is expected to generate 12.98 times less return on investment than Sun Race. In addition to that, AU Optronics is 1.16 times more volatile than Sun Race Sturmey Archer. It trades about 0.01 of its total potential returns per unit of risk. Sun Race Sturmey Archer is currently generating about 0.13 per unit of volatility. If you would invest  2,360  in Sun Race Sturmey Archer on December 21, 2024 and sell it today you would earn a total of  235.00  from holding Sun Race Sturmey Archer or generate 9.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

AU Optronics  vs.  Sun Race Sturmey Archer

AU Optronics

Risk-Adjusted Performance

Very Weak

Over the last 90 days AU Optronics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, AU Optronics is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Sun Race Sturmey

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Race Sturmey Archer are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Sun Race may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with AU Optronics and Sun Race

The main advantage of trading using opposite AU Optronics and Sun Race positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AU Optronics position performs unexpectedly, Sun Race 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 Sun Race will offset losses from the drop in Sun Race's long position.

The idea behind AU Optronics and Sun Race Sturmey Archer pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.