Correlation Between Hon Hai and Singatron Enterprise

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

Diversification Opportunities for Hon Hai and Singatron Enterprise

0.77

Correlation Coefficient

Hon Hai  Singatron Enterprise

Poor diversification

The 3 months correlation between Hon and Singatron is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Hon Hai Precision and Singatron Enterprise Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singatron Enterprise 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 Singatron Enterprise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singatron Enterprise has no effect on the direction of Hon Hai i.e., Hon Hai and Singatron Enterprise go up and down completely randomly.

Pair Corralation between Hon Hai and Singatron Enterprise

Assuming the 90 days trading horizon Hon Hai Precision is expected to under-perform the Singatron Enterprise. In addition to that, Hon Hai is 1.46 times more volatile than Singatron Enterprise Co. It trades about -0.11 of its total potential returns per unit of risk. Singatron Enterprise Co is currently generating about -0.07 per unit of volatility. If you would invest  2,890  in Singatron Enterprise Co on December 28, 2024 and sell it today you would lose (185.00) from holding Singatron Enterprise Co or give up 6.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Hon Hai Precision  vs.  Singatron Enterprise Co

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 abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Singatron Enterprise

Risk-Adjusted Performance

Very Weak

Over the last 90 days Singatron Enterprise Co 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 Hon Hai and Singatron Enterprise

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

The idea behind Hon Hai Precision and Singatron Enterprise Co 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.