Correlation Between Hon Hai and Shinkong Synthetic
Can any of the company-specific risk be diversified away by investing in both Hon Hai and Shinkong Synthetic 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 Hon Hai and Shinkong Synthetic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hon Hai Precision and Shinkong Synthetic Fiber, you can compare the effects of market volatilities on Hon Hai and Shinkong Synthetic 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 Hon Hai with a short position of Shinkong Synthetic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hon Hai and Shinkong Synthetic.
Diversification Opportunities for Hon Hai and Shinkong Synthetic
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hon and Shinkong is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Hon Hai Precision and Shinkong Synthetic Fiber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinkong Synthetic Fiber and Hon Hai 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 Hon Hai Precision are associated (or correlated) with Shinkong Synthetic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinkong Synthetic Fiber has no effect on the direction of Hon Hai i.e., Hon Hai and Shinkong Synthetic go up and down completely randomly.
Pair Corralation between Hon Hai and Shinkong Synthetic
Assuming the 90 days trading horizon Hon Hai Precision is expected to generate 2.09 times more return on investment than Shinkong Synthetic. However, Hon Hai is 2.09 times more volatile than Shinkong Synthetic Fiber. It trades about 0.08 of its potential returns per unit of risk. Shinkong Synthetic Fiber is currently generating about -0.06 per unit of risk. If you would invest 19,100 in Hon Hai Precision on August 28, 2024 and sell it today you would earn a total of 1,150 from holding Hon Hai Precision or generate 6.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hon Hai Precision vs. Shinkong Synthetic Fiber
Performance |
| Timeline |
| Hon Hai Precision |
| Shinkong Synthetic Fiber |
Hon Hai and Shinkong Synthetic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hon Hai and Shinkong Synthetic
The main advantage of trading using opposite Hon Hai and Shinkong Synthetic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hon Hai position performs unexpectedly, Shinkong Synthetic 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 Shinkong Synthetic will offset losses from the drop in Shinkong Synthetic's long position.| Hon Hai vs. United Microelectronics | Hon Hai vs. MediaTek | Hon Hai vs. Chunghwa Telecom Co | Hon Hai vs. Delta Electronics |
| Shinkong Synthetic vs. Cheng Shin Rubber | Shinkong Synthetic vs. China Steel Chemical | Shinkong Synthetic vs. Yulon Motor Co |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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