Correlation Between Foxconn Industrial and Hefei Metalforming

Can any of the company-specific risk be diversified away by investing in both Foxconn Industrial and Hefei Metalforming 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 Industrial and Hefei Metalforming into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Foxconn Industrial Internet and Hefei Metalforming Mach, you can compare the effects of market volatilities on Foxconn Industrial and Hefei Metalforming 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 Industrial with a short position of Hefei Metalforming. Check out your portfolio center. Please also check ongoing floating volatility patterns of Foxconn Industrial and Hefei Metalforming.

Diversification Opportunities for Foxconn Industrial and Hefei Metalforming

0.0

Correlation Coefficient

Foxconn Industrial  Hefei Metalforming

Pay attention - limited upside

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

Pair Corralation between Foxconn Industrial and Hefei Metalforming

If you would invest  638.00  in Hefei Metalforming Mach on October 14, 2024 and sell it today you would earn a total of  28.00  from holding Hefei Metalforming Mach or generate 4.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Foxconn Industrial Internet  vs.  Hefei Metalforming Mach

Foxconn Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Foxconn Industrial Internet has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Foxconn Industrial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hefei Metalforming Mach

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hefei Metalforming Mach are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hefei Metalforming may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Foxconn Industrial and Hefei Metalforming

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

The idea behind Foxconn Industrial Internet and Hefei Metalforming Mach 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.