Correlation Between Hon Hai and Gourmet Master
Can any of the company-specific risk be diversified away by investing in both Hon Hai and Gourmet Master 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 Gourmet Master 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 Gourmet Master Co, you can compare the effects of market volatilities on Hon Hai and Gourmet Master 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 Gourmet Master. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hon Hai and Gourmet Master.
Diversification Opportunities for Hon Hai and Gourmet Master
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hon and Gourmet is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Hon Hai Precision and Gourmet Master Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gourmet Master 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 Gourmet Master. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gourmet Master has no effect on the direction of Hon Hai i.e., Hon Hai and Gourmet Master go up and down completely randomly.
Pair Corralation between Hon Hai and Gourmet Master
Assuming the 90 days trading horizon Hon Hai Precision is expected to under-perform the Gourmet Master. In addition to that, Hon Hai is 1.29 times more volatile than Gourmet Master Co. It trades about -0.18 of its total potential returns per unit of risk. Gourmet Master Co is currently generating about 0.19 per unit of volatility. If you would invest 8,850 in Gourmet Master Co on August 31, 2024 and sell it today you would earn a total of 520.00 from holding Gourmet Master Co or generate 5.88% 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. Gourmet Master Co
Performance |
| Timeline |
| Hon Hai Precision |
| Gourmet Master |
Hon Hai and Gourmet Master Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hon Hai and Gourmet Master
The main advantage of trading using opposite Hon Hai and Gourmet Master positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hon Hai position performs unexpectedly, Gourmet Master 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 Gourmet Master will offset losses from the drop in Gourmet Master's long position.| Hon Hai vs. United Microelectronics | Hon Hai vs. MediaTek | Hon Hai vs. Chunghwa Telecom Co | Hon Hai vs. Delta Electronics |
| Gourmet Master vs. Chaintech Technology Corp | Gourmet Master vs. AVerMedia Technologies | Gourmet Master vs. Avision | Gourmet Master vs. Clevo 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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