Correlation Between Magnora ASA and Hon Hai
Can any of the company-specific risk be diversified away by investing in both Magnora ASA 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 Magnora ASA and Hon Hai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magnora ASA and Hon Hai Precision, you can compare the effects of market volatilities on Magnora ASA 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 Magnora ASA with a short position of Hon Hai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magnora ASA and Hon Hai.
Diversification Opportunities for Magnora ASA and Hon Hai
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Magnora and Hon is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Magnora ASA 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 Magnora ASA 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 Magnora ASA 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 Magnora ASA i.e., Magnora ASA and Hon Hai go up and down completely randomly.
Pair Corralation between Magnora ASA and Hon Hai
Assuming the 90 days trading horizon Magnora ASA is expected to generate 1.04 times less return on investment than Hon Hai. In addition to that, Magnora ASA is 2.18 times more volatile than Hon Hai Precision. It trades about 0.03 of its total potential returns per unit of risk. Hon Hai Precision is currently generating about 0.07 per unit of volatility. If you would invest 631.00 in Hon Hai Precision on August 26, 2024 and sell it today you would earn a total of 609.00 from holding Hon Hai Precision or generate 96.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.79% |
| Values | Daily Returns |
Magnora ASA vs. Hon Hai Precision
Performance |
| Timeline |
| Magnora ASA |
| Hon Hai Precision |
Magnora ASA and Hon Hai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magnora ASA and Hon Hai
The main advantage of trading using opposite Magnora ASA and Hon Hai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magnora ASA 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.| Magnora ASA vs. Samsung Electronics Co | Magnora ASA vs. Samsung Electronics Co | Magnora ASA vs. Hyundai Motor | Magnora ASA vs. Toyota Motor Corp |
| Hon Hai vs. Catalyst Media Group | Hon Hai vs. CATLIN GROUP | Hon Hai vs. Tamburi Investment Partners | Hon Hai vs. Magnora ASA |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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