Correlation Between Hon Hai and Asustek Computer
Can any of the company-specific risk be diversified away by investing in both Hon Hai and Asustek Computer 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 Asustek Computer 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 Asustek Computer, you can compare the effects of market volatilities on Hon Hai and Asustek Computer 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 Asustek Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hon Hai and Asustek Computer.
Diversification Opportunities for Hon Hai and Asustek Computer
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hon and Asustek is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Hon Hai Precision and Asustek Computer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asustek Computer 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 Asustek Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asustek Computer has no effect on the direction of Hon Hai i.e., Hon Hai and Asustek Computer go up and down completely randomly.
Pair Corralation between Hon Hai and Asustek Computer
Assuming the 90 days trading horizon Hon Hai is expected to generate 1.01 times less return on investment than Asustek Computer. In addition to that, Hon Hai is 1.17 times more volatile than Asustek Computer. It trades about 0.05 of its total potential returns per unit of risk. Asustek Computer is currently generating about 0.06 per unit of volatility. If you would invest 51,300 in Asustek Computer on August 29, 2024 and sell it today you would earn a total of 8,100 from holding Asustek Computer or generate 15.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hon Hai Precision vs. Asustek Computer
Performance |
| Timeline |
| Hon Hai Precision |
| Asustek Computer |
Hon Hai and Asustek Computer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hon Hai and Asustek Computer
The main advantage of trading using opposite Hon Hai and Asustek Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hon Hai position performs unexpectedly, Asustek Computer 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 Asustek Computer will offset losses from the drop in Asustek Computer's long position.| Hon Hai vs. United Microelectronics | Hon Hai vs. MediaTek | Hon Hai vs. Chunghwa Telecom Co | Hon Hai vs. Delta Electronics |
| Asustek Computer vs. Quanta Computer | Asustek Computer vs. Acer Inc | Asustek Computer vs. United Microelectronics | Asustek Computer vs. Compal Electronics |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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