Correlation Between Hon Hai and Taiwan Union

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

Diversification Opportunities for Hon Hai and Taiwan Union

0.0

Correlation Coefficient

Hon Hai  Taiwan Union

Pay attention - limited upside

The 3 months correlation between Hon and Taiwan is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Hon Hai Precision and Taiwan Union Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Union Technology 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 Taiwan Union. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Union Technology has no effect on the direction of Hon Hai i.e., Hon Hai and Taiwan Union go up and down completely randomly.

Pair Corralation between Hon Hai and Taiwan Union

If you would invest  0.00  in Taiwan Union Technology on October 8, 2024 and sell it today you would earn a total of  0.00  from holding Taiwan Union Technology or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.79%
Values	Daily Returns

Hon Hai Precision  vs.  Taiwan Union Technology

Hon Hai Precision

Risk-Adjusted Performance

0 of 100

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 fairly stable basic indicators, Hon Hai is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Taiwan Union Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Taiwan Union Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Taiwan Union is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Hon Hai and Taiwan Union

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

The idea behind Hon Hai Precision and Taiwan Union Technology 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.

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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.