Correlation Between Wallbox NV and AU Optronics

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

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

Diversification Opportunities for Wallbox NV and AU Optronics

0.29

Correlation Coefficient

Wallbox NV  AU Optronics

Modest diversification

The 3 months correlation between Wallbox and AUOTY is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Wallbox NV and AU Optronics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AU Optronics Corp and Wallbox NV 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 Wallbox NV are associated (or correlated) with AU Optronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AU Optronics Corp has no effect on the direction of Wallbox NV i.e., Wallbox NV and AU Optronics go up and down completely randomly.

Pair Corralation between Wallbox NV and AU Optronics

If you would invest  590.00  in AU Optronics Corp on September 21, 2024 and sell it today you would earn a total of  0.00  from holding AU Optronics Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	4.76%
Values	Daily Returns

Wallbox NV  vs.  AU Optronics Corp

Wallbox NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wallbox NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental drivers remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

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.

Pair Trading with Wallbox NV and AU Optronics

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

The idea behind Wallbox NV and AU Optronics Corp 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.