Correlation Between Foxconn Technology and Hon Hai
Can any of the company-specific risk be diversified away by investing in both Foxconn Technology 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 Foxconn Technology and Hon Hai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Foxconn Technology Co and Hon Hai Precision, you can compare the effects of market volatilities on Foxconn Technology 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 Foxconn Technology with a short position of Hon Hai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Foxconn Technology and Hon Hai.
Diversification Opportunities for Foxconn Technology and Hon Hai
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Foxconn and Hon is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Foxconn Technology Co 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 Foxconn Technology 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 Foxconn Technology Co 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 Foxconn Technology i.e., Foxconn Technology and Hon Hai go up and down completely randomly.
Pair Corralation between Foxconn Technology and Hon Hai
Assuming the 90 days trading horizon Foxconn Technology Co is expected to generate 0.93 times more return on investment than Hon Hai. However, Foxconn Technology Co is 1.08 times less risky than Hon Hai. It trades about -0.11 of its potential returns per unit of risk. Hon Hai Precision is currently generating about -0.14 per unit of risk. If you would invest 7,500 in Foxconn Technology Co on December 29, 2024 and sell it today you would lose (970.00) from holding Foxconn Technology Co or give up 12.93% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 98.25% |
Values | Daily Returns |
Foxconn Technology Co vs. Hon Hai Precision
Performance |
Timeline |
Foxconn Technology |
Hon Hai Precision |
Foxconn Technology and Hon Hai Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Foxconn Technology and Hon Hai
The main advantage of trading using opposite Foxconn Technology and Hon Hai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Foxconn Technology 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.Foxconn Technology vs. Hon Hai Precision | Foxconn Technology vs. Pegatron Corp | Foxconn Technology vs. MediaTek | Foxconn Technology vs. Hon Hai Precision |
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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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