Correlation Between Cleanaway Waste and Hon Hai

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

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

Diversification Opportunities for Cleanaway Waste and Hon Hai

0.15

Correlation Coefficient

Cleanaway Waste  Hon Hai

Average diversification

The 3 months correlation between Cleanaway and Hon is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Cleanaway Waste Management 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 Cleanaway Waste 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 Cleanaway Waste Management 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 Cleanaway Waste i.e., Cleanaway Waste and Hon Hai go up and down completely randomly.

Pair Corralation between Cleanaway Waste and Hon Hai

Assuming the 90 days trading horizon Cleanaway Waste is expected to generate 2.74 times less return on investment than Hon Hai. But when comparing it to its historical volatility, Cleanaway Waste Management is 1.37 times less risky than Hon Hai. It trades about 0.03 of its potential returns per unit of risk. Hon Hai Precision is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,010  in Hon Hai Precision on September 2, 2024 and sell it today you would earn a total of  80.00  from holding Hon Hai Precision or generate 7.92% return on investment over 90 days.

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

Cleanaway Waste Management  vs.  Hon Hai Precision

Cleanaway Waste Mana

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cleanaway Waste Management are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Cleanaway Waste is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

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 uncertain basic indicators, Hon Hai may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Cleanaway Waste and Hon Hai

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

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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.