Correlation Between AT S and Hon Hai

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

By analyzing existing cross correlation between AT S Austria and Hon Hai Precision, you can compare the effects of market volatilities on AT S 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 AT S with a short position of Hon Hai. Check out your portfolio center. Please also check ongoing floating volatility patterns of AT S and Hon Hai.

Diversification Opportunities for AT S and Hon Hai

0.51

Correlation Coefficient

AT S  Hon Hai

Very weak diversification

The 3 months correlation between ASAAF and Hon is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding AT S Austria 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 AT S 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 AT S Austria 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 AT S i.e., AT S and Hon Hai go up and down completely randomly.

Pair Corralation between AT S and Hon Hai

Assuming the 90 days horizon AT S Austria is expected to generate 0.96 times more return on investment than Hon Hai. However, AT S Austria is 1.04 times less risky than Hon Hai. It trades about 0.08 of its potential returns per unit of risk. Hon Hai Precision is currently generating about 0.05 per unit of risk. If you would invest  1,865  in AT S Austria on September 3, 2024 and sell it today you would earn a total of  160.00  from holding AT S Austria or generate 8.58% return on investment over 90 days.

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

AT S Austria  vs.  Hon Hai Precision

AT S Austria

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AT S Austria are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, AT S may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Hon Hai Precision

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hon Hai Precision are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Hon Hai may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with AT S and Hon Hai

The main advantage of trading using opposite AT S and Hon Hai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AT S 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.

The idea behind AT S Austria and Hon Hai Precision 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.