Correlation Between AU Optronics and Vicor

Can any of the company-specific risk be diversified away by investing in both AU Optronics and Vicor 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 Vicor 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 Vicor, you can compare the effects of market volatilities on AU Optronics and Vicor 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 Vicor. Check out your portfolio center. Please also check ongoing floating volatility patterns of AU Optronics and Vicor.

Diversification Opportunities for AU Optronics and Vicor

-0.57

Correlation Coefficient

AU Optronics  Vicor

Excellent diversification

The 3 months correlation between AUOTY and Vicor is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding AU Optronics Corp and Vicor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vicor 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 Vicor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vicor has no effect on the direction of AU Optronics i.e., AU Optronics and Vicor go up and down completely randomly.

Pair Corralation between AU Optronics and Vicor

If you would invest  3,747  in Vicor on September 21, 2024 and sell it today you would earn a total of  1,161  from holding Vicor or generate 30.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.59%
Values	Daily Returns

AU Optronics Corp  vs.  Vicor

AU Optronics Corp

Risk-Adjusted Performance

0 of 100

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.

Vicor

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vicor are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain fundamental indicators, Vicor reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AU Optronics and Vicor

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

The idea behind AU Optronics Corp and Vicor 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.