Correlation Between AU Optronics and Sinbon Electronics

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

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

Diversification Opportunities for AU Optronics and Sinbon Electronics

0.47

Correlation Coefficient

AU Optronics  Sinbon Electronics

Very weak diversification

The 3 months correlation between 2409 and Sinbon is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding AU Optronics and Sinbon Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinbon Electronics 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 Sinbon Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinbon Electronics has no effect on the direction of AU Optronics i.e., AU Optronics and Sinbon Electronics go up and down completely randomly.

Pair Corralation between AU Optronics and Sinbon Electronics

Assuming the 90 days trading horizon AU Optronics is expected to generate 5.58 times less return on investment than Sinbon Electronics. But when comparing it to its historical volatility, AU Optronics is 1.3 times less risky than Sinbon Electronics. It trades about 0.01 of its potential returns per unit of risk. Sinbon Electronics Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  26,150  in Sinbon Electronics Co on December 27, 2024 and sell it today you would earn a total of  1,450  from holding Sinbon Electronics Co or generate 5.54% 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.  Sinbon Electronics 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.

Sinbon Electronics

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sinbon Electronics Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Sinbon Electronics may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with AU Optronics and Sinbon Electronics

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

The idea behind AU Optronics and Sinbon Electronics 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.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.