Correlation Between Industrial and Foxconn Industrial

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

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

Diversification Opportunities for Industrial and Foxconn Industrial

-0.6

Correlation Coefficient

Industrial  Foxconn Industrial

Excellent diversification

The 3 months correlation between Industrial and Foxconn is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Industrial and Commercial and Foxconn Industrial Internet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foxconn Industrial and 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 Industrial and Commercial are associated (or correlated) with Foxconn Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foxconn Industrial has no effect on the direction of Industrial i.e., Industrial and Foxconn Industrial go up and down completely randomly.

Pair Corralation between Industrial and Foxconn Industrial

Assuming the 90 days trading horizon Industrial and Commercial is expected to generate 0.45 times more return on investment than Foxconn Industrial. However, Industrial and Commercial is 2.23 times less risky than Foxconn Industrial. It trades about 0.04 of its potential returns per unit of risk. Foxconn Industrial Internet is currently generating about -0.1 per unit of risk. If you would invest  647.00  in Industrial and Commercial on October 12, 2024 and sell it today you would earn a total of  20.00  from holding Industrial and Commercial or generate 3.09% return on investment over 90 days.

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

Industrial and Commercial  vs.  Foxconn Industrial Internet

Industrial and Commercial

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Industrial and Commercial are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Industrial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Industrial and Foxconn Industrial

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

The idea behind Industrial and Commercial and Foxconn Industrial Internet 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.