Correlation Between AU Optronics and WUS Printed

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

By analyzing existing cross correlation between AU Optronics and WUS Printed Circuit, you can compare the effects of market volatilities on AU Optronics and WUS Printed 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 WUS Printed. Check out your portfolio center. Please also check ongoing floating volatility patterns of AU Optronics and WUS Printed.

Diversification Opportunities for AU Optronics and WUS Printed

0.04

Correlation Coefficient

AU Optronics  WUS Printed

Significant diversification

The 3 months correlation between 2409 and WUS is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding AU Optronics and WUS Printed Circuit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WUS Printed Circuit 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 WUS Printed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WUS Printed Circuit has no effect on the direction of AU Optronics i.e., AU Optronics and WUS Printed go up and down completely randomly.

Pair Corralation between AU Optronics and WUS Printed

Assuming the 90 days trading horizon AU Optronics is expected to generate 32.3 times less return on investment than WUS Printed. But when comparing it to its historical volatility, AU Optronics is 1.62 times less risky than WUS Printed. It trades about 0.0 of its potential returns per unit of risk. WUS Printed Circuit is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  3,510  in WUS Printed Circuit on September 19, 2024 and sell it today you would earn a total of  1,260  from holding WUS Printed Circuit or generate 35.9% return on investment over 90 days.

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

AU Optronics  vs.  WUS Printed Circuit

AU Optronics

Risk-Adjusted Performance

0 of 100

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 latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

WUS Printed Circuit

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in WUS Printed Circuit are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, WUS Printed is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with AU Optronics and WUS Printed

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

The idea behind AU Optronics and WUS Printed Circuit 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.