Correlation Between Hon Hai and Senao International
Can any of the company-specific risk be diversified away by investing in both Hon Hai and Senao International 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 Senao International 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 Senao International Co, you can compare the effects of market volatilities on Hon Hai and Senao International 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 Senao International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hon Hai and Senao International.
Diversification Opportunities for Hon Hai and Senao International
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hon and Senao is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Hon Hai Precision and Senao International Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Senao International 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 Senao International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Senao International has no effect on the direction of Hon Hai i.e., Hon Hai and Senao International go up and down completely randomly.
Pair Corralation between Hon Hai and Senao International
Assuming the 90 days trading horizon Hon Hai Precision is expected to under-perform the Senao International. In addition to that, Hon Hai is 3.02 times more volatile than Senao International Co. It trades about -0.19 of its total potential returns per unit of risk. Senao International Co is currently generating about 0.02 per unit of volatility. If you would invest 3,505 in Senao International Co on August 26, 2024 and sell it today you would earn a total of 5.00 from holding Senao International Co or generate 0.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hon Hai Precision vs. Senao International Co
Performance |
| Timeline |
| Hon Hai Precision |
| Senao International |
Hon Hai and Senao International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hon Hai and Senao International
The main advantage of trading using opposite Hon Hai and Senao International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hon Hai position performs unexpectedly, Senao International 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 Senao International will offset losses from the drop in Senao International's long position.| Hon Hai vs. United Microelectronics | Hon Hai vs. MediaTek | Hon Hai vs. Chunghwa Telecom Co | Hon Hai vs. Delta Electronics |
| Senao International vs. Taiwan Semiconductor Manufacturing | Senao International vs. Hon Hai Precision | Senao International vs. MediaTek | Senao International 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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