Correlation Between AU Optronics and Everspring Industry

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

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

Diversification Opportunities for AU Optronics and Everspring Industry

0.38

Correlation Coefficient

AU Optronics  Everspring Industry

Weak diversification

The 3 months correlation between 2409 and Everspring is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding AU Optronics and Everspring Industry Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everspring Industry 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 Everspring Industry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everspring Industry has no effect on the direction of AU Optronics i.e., AU Optronics and Everspring Industry go up and down completely randomly.

Pair Corralation between AU Optronics and Everspring Industry

Assuming the 90 days trading horizon AU Optronics is expected to under-perform the Everspring Industry. In addition to that, AU Optronics is 1.19 times more volatile than Everspring Industry Co. It trades about -0.04 of its total potential returns per unit of risk. Everspring Industry Co is currently generating about -0.02 per unit of volatility. If you would invest  1,260  in Everspring Industry Co on December 3, 2024 and sell it today you would lose (30.00) from holding Everspring Industry Co or give up 2.38% of portfolio value over 90 days.

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

AU Optronics  vs.  Everspring Industry Co

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.

Everspring Industry

Risk-Adjusted Performance

Very Weak

Over the last 90 days Everspring Industry Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Everspring Industry 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 Everspring Industry

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

The idea behind AU Optronics and Everspring Industry Co 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..