Correlation Between AU Optronics and Benchmark Electronics

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

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

Diversification Opportunities for AU Optronics and Benchmark Electronics

0.0

Correlation Coefficient

AU Optronics  Benchmark Electronics

Pay attention - limited upside

The 3 months correlation between AUOTY and Benchmark is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding AU Optronics Corp and Benchmark Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Benchmark 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 Corp are associated (or correlated) with Benchmark Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Benchmark Electronics has no effect on the direction of AU Optronics i.e., AU Optronics and Benchmark Electronics go up and down completely randomly.

Pair Corralation between AU Optronics and Benchmark Electronics

If you would invest (100.00) in AU Optronics Corp on December 3, 2024 and sell it today you would earn a total of  100.00  from holding AU Optronics Corp or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

AU Optronics Corp  vs.  Benchmark Electronics

AU Optronics Corp

Risk-Adjusted Performance

Very Weak

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

Benchmark Electronics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Benchmark Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with AU Optronics and Benchmark Electronics

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

The idea behind AU Optronics Corp and Benchmark Electronics 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.