Correlation Between Kopin and Hon Hai

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

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

Diversification Opportunities for Kopin and Hon Hai

0.08

Correlation Coefficient

Kopin  Hon Hai

Significant diversification

The 3 months correlation between Kopin and Hon is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Kopin 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 Kopin 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 Kopin 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 Kopin i.e., Kopin and Hon Hai go up and down completely randomly.

Pair Corralation between Kopin and Hon Hai

Given the investment horizon of 90 days Kopin is expected to generate 2.9 times more return on investment than Hon Hai. However, Kopin is 2.9 times more volatile than Hon Hai Precision. It trades about 0.02 of its potential returns per unit of risk. Hon Hai Precision is currently generating about -0.07 per unit of risk. If you would invest  139.00  in Kopin on December 27, 2024 and sell it today you would lose (8.00) from holding Kopin or give up 5.76% of portfolio value over 90 days.

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

Kopin  vs.  Hon Hai Precision

Kopin

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kopin are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Kopin may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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. 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.

Pair Trading with Kopin and Hon Hai

The main advantage of trading using opposite Kopin and Hon Hai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kopin 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 Kopin 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.