Correlation Between AU Optronics and Elitegroup Computer
Can any of the company-specific risk be diversified away by investing in both AU Optronics and Elitegroup Computer 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 Elitegroup Computer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AU Optronics and Elitegroup Computer Systems, you can compare the effects of market volatilities on AU Optronics and Elitegroup Computer 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 Elitegroup Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of AU Optronics and Elitegroup Computer.
Diversification Opportunities for AU Optronics and Elitegroup Computer
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between 2409 and Elitegroup is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding AU Optronics and Elitegroup Computer Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elitegroup Computer 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 Elitegroup Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elitegroup Computer has no effect on the direction of AU Optronics i.e., AU Optronics and Elitegroup Computer go up and down completely randomly.
Pair Corralation between AU Optronics and Elitegroup Computer
Assuming the 90 days trading horizon AU Optronics is expected to generate 1.07 times more return on investment than Elitegroup Computer. However, AU Optronics is 1.07 times more volatile than Elitegroup Computer Systems. It trades about -0.03 of its potential returns per unit of risk. Elitegroup Computer Systems is currently generating about -0.2 per unit of risk. If you would invest 1,485 in AU Optronics on December 30, 2024 and sell it today you would lose (55.00) from holding AU Optronics or give up 3.7% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
AU Optronics vs. Elitegroup Computer Systems
Performance |
Timeline |
AU Optronics |
Elitegroup Computer |
AU Optronics and Elitegroup Computer Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with AU Optronics and Elitegroup Computer
The main advantage of trading using opposite AU Optronics and Elitegroup Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AU Optronics position performs unexpectedly, Elitegroup Computer 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 Elitegroup Computer will offset losses from the drop in Elitegroup Computer's long position.AU Optronics vs. Innolux Corp | AU Optronics vs. United Microelectronics | AU Optronics vs. China Steel Corp | AU Optronics vs. Quanta Computer |
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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