Correlation Between National Atomic and Hon Hai

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

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

Diversification Opportunities for National Atomic and Hon Hai

0.67

Correlation Coefficient

National Atomic  Hon Hai

Poor diversification

The 3 months correlation between National and Hon is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding National Atomic Co 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 National Atomic 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 National Atomic Co 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 National Atomic i.e., National Atomic and Hon Hai go up and down completely randomly.

Pair Corralation between National Atomic and Hon Hai

Assuming the 90 days trading horizon National Atomic Co is expected to generate 0.71 times more return on investment than Hon Hai. However, National Atomic Co is 1.4 times less risky than Hon Hai. It trades about -0.14 of its potential returns per unit of risk. Hon Hai Precision is currently generating about -0.1 per unit of risk. If you would invest  4,060  in National Atomic Co on December 3, 2024 and sell it today you would lose (540.00) from holding National Atomic Co or give up 13.3% of portfolio value over 90 days.

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

National Atomic Co  vs.  Hon Hai Precision

National Atomic

Risk-Adjusted Performance

Very Weak

Over the last 90 days National Atomic Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Hon Hai Precision

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hon Hai Precision has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with National Atomic and Hon Hai

The main advantage of trading using opposite National Atomic and Hon Hai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Atomic 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 National Atomic Co 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..