Correlation Between Hon Hai and Xperi Corp

Can any of the company-specific risk be diversified away by investing in both Hon Hai and Xperi Corp 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 Xperi Corp 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 Xperi Corp, you can compare the effects of market volatilities on Hon Hai and Xperi Corp 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 Xperi Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hon Hai and Xperi Corp.

Diversification Opportunities for Hon Hai and Xperi Corp

-0.62

Correlation Coefficient

Hon Hai  Xperi Corp

Excellent diversification

The 3 months correlation between Hon and Xperi is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Hon Hai Precision and Xperi Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xperi Corp 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 Xperi Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xperi Corp has no effect on the direction of Hon Hai i.e., Hon Hai and Xperi Corp go up and down completely randomly.

Pair Corralation between Hon Hai and Xperi Corp

Assuming the 90 days horizon Hon Hai Precision is expected to generate 0.91 times more return on investment than Xperi Corp. However, Hon Hai Precision is 1.1 times less risky than Xperi Corp. It trades about 0.1 of its potential returns per unit of risk. Xperi Corp is currently generating about 0.0 per unit of risk. If you would invest  629.00  in Hon Hai Precision on October 7, 2024 and sell it today you would earn a total of  471.00  from holding Hon Hai Precision or generate 74.88% return on investment over 90 days.

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

Hon Hai Precision  vs.  Xperi Corp

Hon Hai Precision

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hon Hai Precision has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Xperi Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Xperi Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, Xperi Corp reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hon Hai and Xperi Corp

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

The idea behind Hon Hai Precision and Xperi Corp 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.