Correlation Between Fulltech Fiber and Hon Hai

Can any of the company-specific risk be diversified away by investing in both Fulltech Fiber and Hon Hai 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 Fulltech Fiber and Hon Hai into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fulltech Fiber Glass and Hon Hai Precision, you can compare the effects of market volatilities on Fulltech Fiber and Hon Hai 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 Fulltech Fiber with a short position of Hon Hai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fulltech Fiber and Hon Hai.

Diversification Opportunities for Fulltech Fiber and Hon Hai

-0.45

Correlation Coefficient

Fulltech Fiber  Hon Hai

Very good diversification

The 3 months correlation between Fulltech and Hon is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Fulltech Fiber Glass and Hon Hai Precision in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hon Hai Precision and Fulltech Fiber 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 Fulltech Fiber Glass are associated (or correlated) with Hon Hai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hon Hai Precision has no effect on the direction of Fulltech Fiber i.e., Fulltech Fiber and Hon Hai go up and down completely randomly.

Pair Corralation between Fulltech Fiber and Hon Hai

Assuming the 90 days trading horizon Fulltech Fiber Glass is expected to generate 1.44 times more return on investment than Hon Hai. However, Fulltech Fiber is 1.44 times more volatile than Hon Hai Precision. It trades about 0.11 of its potential returns per unit of risk. Hon Hai Precision is currently generating about -0.09 per unit of risk. If you would invest  2,785  in Fulltech Fiber Glass on December 23, 2024 and sell it today you would earn a total of  500.00  from holding Fulltech Fiber Glass or generate 17.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Fulltech Fiber Glass  vs.  Hon Hai Precision

Fulltech Fiber Glass

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fulltech Fiber Glass are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Fulltech Fiber showed solid returns over the last few months and may actually be approaching a breakup point.

Hon Hai Precision

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hon Hai Precision has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Fulltech Fiber and Hon Hai

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

The idea behind Fulltech Fiber Glass and Hon Hai Precision 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.