Correlation Between Hon Hai and Makalot Industrial
Can any of the company-specific risk be diversified away by investing in both Hon Hai and Makalot Industrial 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 Makalot Industrial 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 Makalot Industrial Co, you can compare the effects of market volatilities on Hon Hai and Makalot Industrial 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 Makalot Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hon Hai and Makalot Industrial.
Diversification Opportunities for Hon Hai and Makalot Industrial
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Hon and Makalot is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Hon Hai Precision and Makalot Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Makalot 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 Makalot Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Makalot Industrial has no effect on the direction of Hon Hai i.e., Hon Hai and Makalot Industrial go up and down completely randomly.
Pair Corralation between Hon Hai and Makalot Industrial
Assuming the 90 days trading horizon Hon Hai Precision is expected to generate 0.54 times more return on investment than Makalot Industrial. However, Hon Hai Precision is 1.84 times less risky than Makalot Industrial. It trades about -0.05 of its potential returns per unit of risk. Makalot Industrial Co is currently generating about -0.05 per unit of risk. If you would invest 21,500 in Hon Hai Precision on August 28, 2024 and sell it today you would lose (450.00) from holding Hon Hai Precision or give up 2.09% 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. Makalot Industrial Co
Performance |
| Timeline |
| Hon Hai Precision |
| Makalot Industrial |
Hon Hai and Makalot Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hon Hai and Makalot Industrial
The main advantage of trading using opposite Hon Hai and Makalot Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hon Hai position performs unexpectedly, Makalot Industrial 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 Makalot Industrial will offset losses from the drop in Makalot Industrial's long position.| Hon Hai vs. United Microelectronics | Hon Hai vs. MediaTek | Hon Hai vs. Chunghwa Telecom Co | Hon Hai vs. Delta Electronics |
| Makalot Industrial vs. Taiwan Semiconductor Manufacturing | Makalot Industrial vs. Hon Hai Precision | Makalot Industrial vs. MediaTek | Makalot Industrial 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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