Correlation Between Hon Hai and Zig Sheng
Can any of the company-specific risk be diversified away by investing in both Hon Hai and Zig Sheng 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 Zig Sheng 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 Zig Sheng Industrial, you can compare the effects of market volatilities on Hon Hai and Zig Sheng 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 Zig Sheng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hon Hai and Zig Sheng.
Diversification Opportunities for Hon Hai and Zig Sheng
Pay attention - limited upside
The 3 months correlation between Hon and Zig is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Hon Hai Precision and Zig Sheng Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zig Sheng Industrial 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 Zig Sheng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zig Sheng Industrial has no effect on the direction of Hon Hai i.e., Hon Hai and Zig Sheng go up and down completely randomly.
Pair Corralation between Hon Hai and Zig Sheng
Assuming the 90 days trading horizon Hon Hai Precision is expected to under-perform the Zig Sheng. In addition to that, Hon Hai is 1.54 times more volatile than Zig Sheng Industrial. It trades about -0.11 of its total potential returns per unit of risk. Zig Sheng Industrial is currently generating about -0.1 per unit of volatility. If you would invest 1,030 in Zig Sheng Industrial on August 25, 2024 and sell it today you would lose (25.00) from holding Zig Sheng Industrial or give up 2.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hon Hai Precision vs. Zig Sheng Industrial
Performance |
| Timeline |
| Hon Hai Precision |
| Zig Sheng Industrial |
Hon Hai and Zig Sheng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hon Hai and Zig Sheng
The main advantage of trading using opposite Hon Hai and Zig Sheng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hon Hai position performs unexpectedly, Zig Sheng 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 Zig Sheng will offset losses from the drop in Zig Sheng's long position.| Hon Hai vs. United Microelectronics | Hon Hai vs. MediaTek | Hon Hai vs. Chunghwa Telecom Co | Hon Hai vs. Delta Electronics |
| Zig Sheng vs. Taiwan Semiconductor Manufacturing | Zig Sheng vs. Hon Hai Precision | Zig Sheng vs. MediaTek | Zig Sheng vs. Chunghwa Telecom 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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