Correlation Between Hon Hai and Airmate Cayman
Can any of the company-specific risk be diversified away by investing in both Hon Hai and Airmate Cayman 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 Airmate Cayman 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 Airmate Cayman International, you can compare the effects of market volatilities on Hon Hai and Airmate Cayman 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 Airmate Cayman. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hon Hai and Airmate Cayman.
Diversification Opportunities for Hon Hai and Airmate Cayman
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hon and Airmate is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Hon Hai Precision and Airmate Cayman International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airmate Cayman Inter 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 Airmate Cayman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airmate Cayman Inter has no effect on the direction of Hon Hai i.e., Hon Hai and Airmate Cayman go up and down completely randomly.
Pair Corralation between Hon Hai and Airmate Cayman
Assuming the 90 days trading horizon Hon Hai Precision is expected to under-perform the Airmate Cayman. In addition to that, Hon Hai is 2.79 times more volatile than Airmate Cayman International. It trades about -0.15 of its total potential returns per unit of risk. Airmate Cayman International is currently generating about 0.09 per unit of volatility. If you would invest 1,380 in Airmate Cayman International on December 15, 2024 and sell it today you would earn a total of 15.00 from holding Airmate Cayman International or generate 1.09% 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. Airmate Cayman International
Performance |
| Timeline |
| Hon Hai Precision |
| Airmate Cayman Inter |
Hon Hai and Airmate Cayman Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hon Hai and Airmate Cayman
The main advantage of trading using opposite Hon Hai and Airmate Cayman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hon Hai position performs unexpectedly, Airmate Cayman 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 Airmate Cayman will offset losses from the drop in Airmate Cayman's long position.| Hon Hai vs. United Microelectronics | ||
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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