Correlation Between Hon Hai and Taishin Financial
Can any of the company-specific risk be diversified away by investing in both Hon Hai and Taishin Financial 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 Taishin Financial 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 Taishin Financial Holding, you can compare the effects of market volatilities on Hon Hai and Taishin Financial 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 Taishin Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hon Hai and Taishin Financial.
Diversification Opportunities for Hon Hai and Taishin Financial
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hon and Taishin is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Hon Hai Precision and Taishin Financial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taishin Financial Holding 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 Taishin Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taishin Financial Holding has no effect on the direction of Hon Hai i.e., Hon Hai and Taishin Financial go up and down completely randomly.
Pair Corralation between Hon Hai and Taishin Financial
Assuming the 90 days trading horizon Hon Hai Precision is expected to generate 9.41 times more return on investment than Taishin Financial. However, Hon Hai is 9.41 times more volatile than Taishin Financial Holding. It trades about 0.14 of its potential returns per unit of risk. Taishin Financial Holding is currently generating about -0.02 per unit of risk. If you would invest 19,100 in Hon Hai Precision on August 28, 2024 and sell it today you would earn a total of 1,950 from holding Hon Hai Precision or generate 10.21% 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. Taishin Financial Holding
Performance |
| Timeline |
| Hon Hai Precision |
| Taishin Financial Holding |
Hon Hai and Taishin Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hon Hai and Taishin Financial
The main advantage of trading using opposite Hon Hai and Taishin Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hon Hai position performs unexpectedly, Taishin Financial 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 Taishin Financial will offset losses from the drop in Taishin Financial's long position.| Hon Hai vs. United Microelectronics | Hon Hai vs. MediaTek | Hon Hai vs. Chunghwa Telecom Co | Hon Hai vs. Delta Electronics |
| Taishin Financial vs. Mega Financial Holding | Taishin Financial vs. Taiwan Cooperative Financial | Taishin Financial vs. ESUN Financial Holding | Taishin Financial vs. Hua Nan Financial |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
Other Complementary Tools
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |