Correlation Between Hon Hai and Quanta Storage
Can any of the company-specific risk be diversified away by investing in both Hon Hai and Quanta Storage 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 Quanta Storage 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 Quanta Storage, you can compare the effects of market volatilities on Hon Hai and Quanta Storage 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 Quanta Storage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hon Hai and Quanta Storage.
Diversification Opportunities for Hon Hai and Quanta Storage
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hon and Quanta is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Hon Hai Precision and Quanta Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quanta Storage 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 Quanta Storage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quanta Storage has no effect on the direction of Hon Hai i.e., Hon Hai and Quanta Storage go up and down completely randomly.
Pair Corralation between Hon Hai and Quanta Storage
Assuming the 90 days trading horizon Hon Hai Precision is expected to under-perform the Quanta Storage. But the stock apears to be less risky and, when comparing its historical volatility, Hon Hai Precision is 1.77 times less risky than Quanta Storage. The stock trades about -0.37 of its potential returns per unit of risk. The Quanta Storage is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 9,620 in Quanta Storage on September 26, 2024 and sell it today you would earn a total of 1,180 from holding Quanta Storage or generate 12.27% 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. Quanta Storage
Performance |
Timeline |
Hon Hai Precision |
Quanta Storage |
Hon Hai and Quanta Storage Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hon Hai and Quanta Storage
The main advantage of trading using opposite Hon Hai and Quanta Storage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hon Hai position performs unexpectedly, Quanta Storage 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 Quanta Storage will offset losses from the drop in Quanta Storage's long position.Hon Hai vs. Century Wind Power | Hon Hai vs. Green World Fintech | Hon Hai vs. Ingentec | Hon Hai vs. Chaheng Precision Co |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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