Correlation Between Hon Hai and Hon Hai
Can any of the company-specific risk be diversified away by investing in both Hon Hai 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 Hon Hai and Hon Hai 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 Hon Hai Precision, you can compare the effects of market volatilities on Hon Hai 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 Hon Hai with a short position of Hon Hai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hon Hai and Hon Hai.
Diversification Opportunities for Hon Hai and Hon Hai
Poor diversification
The 3 months correlation between Hon and Hon is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Hon Hai Precision 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 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 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 Hon Hai i.e., Hon Hai and Hon Hai go up and down completely randomly.
Pair Corralation between Hon Hai and Hon Hai
Assuming the 90 days horizon Hon Hai Precision is expected to generate 1.15 times more return on investment than Hon Hai. However, Hon Hai is 1.15 times more volatile than Hon Hai Precision. It trades about -0.07 of its potential returns per unit of risk. Hon Hai Precision is currently generating about -0.09 per unit of risk. If you would invest 1,116 in Hon Hai Precision on December 27, 2024 and sell it today you would lose (128.00) from holding Hon Hai Precision or give up 11.47% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 91.67% |
Values | Daily Returns |
Hon Hai Precision vs. Hon Hai Precision
Performance |
Timeline |
Hon Hai Precision |
Hon Hai Precision |
Hon Hai and Hon Hai Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hon Hai and Hon Hai
The main advantage of trading using opposite Hon Hai and Hon Hai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hon Hai 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.Hon Hai vs. AT S Austria | Hon Hai vs. alpha En | Hon Hai vs. Alps Electric Co | Hon Hai vs. Bitmine Immersion Technologies |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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