Correlation Between McEwen Mining and Hon Hai
Can any of the company-specific risk be diversified away by investing in both McEwen Mining 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 McEwen Mining and Hon Hai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McEwen Mining and Hon Hai Precision, you can compare the effects of market volatilities on McEwen Mining 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 McEwen Mining with a short position of Hon Hai. Check out your portfolio center. Please also check ongoing floating volatility patterns of McEwen Mining and Hon Hai.
Diversification Opportunities for McEwen Mining and Hon Hai
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between McEwen and Hon is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding McEwen Mining 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 McEwen Mining 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 McEwen Mining 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 McEwen Mining i.e., McEwen Mining and Hon Hai go up and down completely randomly.
Pair Corralation between McEwen Mining and Hon Hai
Assuming the 90 days trading horizon McEwen Mining is expected to generate 2.43 times less return on investment than Hon Hai. In addition to that, McEwen Mining is 1.61 times more volatile than Hon Hai Precision. It trades about 0.02 of its total potential returns per unit of risk. Hon Hai Precision is currently generating about 0.08 per unit of volatility. If you would invest 646.00 in Hon Hai Precision on August 31, 2024 and sell it today you would earn a total of 544.00 from holding Hon Hai Precision or generate 84.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.95% |
| Values | Daily Returns |
McEwen Mining vs. Hon Hai Precision
Performance |
| Timeline |
| McEwen Mining |
| Hon Hai Precision |
McEwen Mining and Hon Hai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McEwen Mining and Hon Hai
The main advantage of trading using opposite McEwen Mining and Hon Hai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McEwen Mining 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.| McEwen Mining vs. Datalogic | McEwen Mining vs. Federal Realty Investment | McEwen Mining vs. Bankers Investment Trust | McEwen Mining vs. Automatic Data Processing |
| Hon Hai vs. McEwen Mining | Hon Hai vs. DFS Furniture PLC | Hon Hai vs. Beazer Homes USA | Hon Hai vs. Home Depot |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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