Correlation Between Hong Ho and Forcecon Technology
Can any of the company-specific risk be diversified away by investing in both Hong Ho and Forcecon Technology 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 Hong Ho and Forcecon Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hong Ho Precision and Forcecon Technology Co, you can compare the effects of market volatilities on Hong Ho and Forcecon Technology 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 Hong Ho with a short position of Forcecon Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hong Ho and Forcecon Technology.
Diversification Opportunities for Hong Ho and Forcecon Technology
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hong and Forcecon is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Hong Ho Precision and Forcecon Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forcecon Technology and Hong Ho 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 Hong Ho Precision are associated (or correlated) with Forcecon Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forcecon Technology has no effect on the direction of Hong Ho i.e., Hong Ho and Forcecon Technology go up and down completely randomly.
Pair Corralation between Hong Ho and Forcecon Technology
Assuming the 90 days trading horizon Hong Ho Precision is expected to generate 1.51 times more return on investment than Forcecon Technology. However, Hong Ho is 1.51 times more volatile than Forcecon Technology Co. It trades about 0.34 of its potential returns per unit of risk. Forcecon Technology Co is currently generating about 0.04 per unit of risk. If you would invest 4,350 in Hong Ho Precision on September 4, 2024 and sell it today you would earn a total of 1,030 from holding Hong Ho Precision or generate 23.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hong Ho Precision vs. Forcecon Technology Co
Performance |
| Timeline |
| Hong Ho Precision |
| Forcecon Technology |
Hong Ho and Forcecon Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hong Ho and Forcecon Technology
The main advantage of trading using opposite Hong Ho and Forcecon Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hong Ho position performs unexpectedly, Forcecon Technology 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 Forcecon Technology will offset losses from the drop in Forcecon Technology's long position.| Hong Ho vs. Everest Textile Co | Hong Ho vs. Hong Yi Fiber | Hong Ho vs. Yi Jinn Industrial | Hong Ho vs. Carnival Industrial Corp |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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