Correlation Between AU Optronics and Davicom Semiconductor
Can any of the company-specific risk be diversified away by investing in both AU Optronics and Davicom Semiconductor 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 Davicom Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AU Optronics and Davicom Semiconductor, you can compare the effects of market volatilities on AU Optronics and Davicom Semiconductor 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 Davicom Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of AU Optronics and Davicom Semiconductor.
Diversification Opportunities for AU Optronics and Davicom Semiconductor
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 2409 and Davicom is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding AU Optronics and Davicom Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Davicom Semiconductor 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 Davicom Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Davicom Semiconductor has no effect on the direction of AU Optronics i.e., AU Optronics and Davicom Semiconductor go up and down completely randomly.
Pair Corralation between AU Optronics and Davicom Semiconductor
Assuming the 90 days trading horizon AU Optronics is expected to under-perform the Davicom Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, AU Optronics is 1.35 times less risky than Davicom Semiconductor. The stock trades about -0.04 of its potential returns per unit of risk. The Davicom Semiconductor is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,955 in Davicom Semiconductor on September 12, 2024 and sell it today you would earn a total of 65.00 from holding Davicom Semiconductor or generate 2.2% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
AU Optronics vs. Davicom Semiconductor
Performance |
Timeline |
AU Optronics |
Davicom Semiconductor |
AU Optronics and Davicom Semiconductor Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with AU Optronics and Davicom Semiconductor
The main advantage of trading using opposite AU Optronics and Davicom Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AU Optronics position performs unexpectedly, Davicom Semiconductor 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 Davicom Semiconductor will offset losses from the drop in Davicom Semiconductor's long position.AU Optronics vs. Innolux Corp | AU Optronics vs. Ruentex Development Co | AU Optronics vs. WiseChip Semiconductor | AU Optronics vs. Novatek Microelectronics Corp |
Davicom Semiconductor vs. AU Optronics | Davicom Semiconductor vs. Innolux Corp | Davicom Semiconductor vs. Ruentex Development Co | Davicom Semiconductor vs. WiseChip Semiconductor |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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