Correlation Between Hon Hai and Acelon Chemicals
Can any of the company-specific risk be diversified away by investing in both Hon Hai and Acelon Chemicals 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 Acelon Chemicals 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 Acelon Chemicals Fiber, you can compare the effects of market volatilities on Hon Hai and Acelon Chemicals 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 Acelon Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hon Hai and Acelon Chemicals.
Diversification Opportunities for Hon Hai and Acelon Chemicals
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hon and Acelon is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Hon Hai Precision and Acelon Chemicals Fiber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acelon Chemicals 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 Acelon Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acelon Chemicals Fiber has no effect on the direction of Hon Hai i.e., Hon Hai and Acelon Chemicals go up and down completely randomly.
Pair Corralation between Hon Hai and Acelon Chemicals
Assuming the 90 days trading horizon Hon Hai Precision is expected to under-perform the Acelon Chemicals. But the stock apears to be less risky and, when comparing its historical volatility, Hon Hai Precision is 2.81 times less risky than Acelon Chemicals. The stock trades about -0.19 of its potential returns per unit of risk. The Acelon Chemicals Fiber is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,320 in Acelon Chemicals Fiber on August 26, 2024 and sell it today you would earn a total of 130.00 from holding Acelon Chemicals Fiber or generate 9.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hon Hai Precision vs. Acelon Chemicals Fiber
Performance |
| Timeline |
| Hon Hai Precision |
| Acelon Chemicals Fiber |
Hon Hai and Acelon Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hon Hai and Acelon Chemicals
The main advantage of trading using opposite Hon Hai and Acelon Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hon Hai position performs unexpectedly, Acelon Chemicals 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 Acelon Chemicals will offset losses from the drop in Acelon Chemicals' long position.| Hon Hai vs. United Microelectronics | Hon Hai vs. MediaTek | Hon Hai vs. Chunghwa Telecom Co | Hon Hai vs. Delta Electronics |
| Acelon Chemicals vs. Taiwan Semiconductor Manufacturing | Acelon Chemicals vs. Hon Hai Precision | Acelon Chemicals vs. MediaTek | Acelon Chemicals 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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