Correlation Between Hon Hai and Yuanta Financial
Can any of the company-specific risk be diversified away by investing in both Hon Hai and Yuanta Financial 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 Hon Hai and Yuanta Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hon Hai Precision and Yuanta Financial Holdings, you can compare the effects of market volatilities on Hon Hai and Yuanta Financial 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 Hon Hai with a short position of Yuanta Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hon Hai and Yuanta Financial.
Diversification Opportunities for Hon Hai and Yuanta Financial
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hon and Yuanta is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Hon Hai Precision and Yuanta Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yuanta Financial Holdings and Hon Hai 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 Hon Hai Precision are associated (or correlated) with Yuanta Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yuanta Financial Holdings has no effect on the direction of Hon Hai i.e., Hon Hai and Yuanta Financial go up and down completely randomly.
Pair Corralation between Hon Hai and Yuanta Financial
Assuming the 90 days trading horizon Hon Hai Precision is expected to generate 1.59 times more return on investment than Yuanta Financial. However, Hon Hai is 1.59 times more volatile than Yuanta Financial Holdings. It trades about 0.07 of its potential returns per unit of risk. Yuanta Financial Holdings is currently generating about 0.08 per unit of risk. If you would invest 9,873 in Hon Hai Precision on December 11, 2024 and sell it today you would earn a total of 7,327 from holding Hon Hai Precision or generate 74.21% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Hon Hai Precision vs. Yuanta Financial Holdings
Performance |
Timeline |
Hon Hai Precision |
Yuanta Financial Holdings |
Hon Hai and Yuanta Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hon Hai and Yuanta Financial
The main advantage of trading using opposite Hon Hai and Yuanta Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hon Hai position performs unexpectedly, Yuanta Financial 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 Yuanta Financial will offset losses from the drop in Yuanta Financial's long position.Hon Hai vs. United Microelectronics | Hon Hai vs. MediaTek | Hon Hai vs. Chunghwa Telecom Co | Hon Hai vs. Delta Electronics |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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