Correlation Between AU Optronics and Babcock Wilcox
Can any of the company-specific risk be diversified away by investing in both AU Optronics and Babcock Wilcox 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 Babcock Wilcox 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 Babcock Wilcox Enterprises, you can compare the effects of market volatilities on AU Optronics and Babcock Wilcox 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 Babcock Wilcox. Check out your portfolio center. Please also check ongoing floating volatility patterns of AU Optronics and Babcock Wilcox.
Diversification Opportunities for AU Optronics and Babcock Wilcox
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between AUO and Babcock is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding AU Optronics Corp and Babcock Wilcox Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Babcock Wilcox Enter 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 Babcock Wilcox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Babcock Wilcox Enter has no effect on the direction of AU Optronics i.e., AU Optronics and Babcock Wilcox go up and down completely randomly.
Pair Corralation between AU Optronics and Babcock Wilcox
If you would invest (100.00) in AU Optronics Corp on January 27, 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. Babcock Wilcox Enterprises
Performance |
| Timeline |
| AU Optronics Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Babcock Wilcox Enter |
AU Optronics and Babcock Wilcox Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AU Optronics and Babcock Wilcox
The main advantage of trading using opposite AU Optronics and Babcock Wilcox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AU Optronics position performs unexpectedly, Babcock Wilcox 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 Babcock Wilcox will offset losses from the drop in Babcock Wilcox's long position.| AU Optronics vs. STMicroelectronics NV ADR | AU Optronics vs. United Microelectronics | AU Optronics vs. Vishay Intertechnology | AU Optronics vs. Taiwan Semiconductor Manufacturing |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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