Correlation Between Hon Hai and Cayman Tung
Can any of the company-specific risk be diversified away by investing in both Hon Hai and Cayman Tung 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 Cayman Tung 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 Cayman Tung Ling, you can compare the effects of market volatilities on Hon Hai and Cayman Tung 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 Cayman Tung. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hon Hai and Cayman Tung.
Diversification Opportunities for Hon Hai and Cayman Tung
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hon and Cayman is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Hon Hai Precision and Cayman Tung Ling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cayman Tung Ling 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 Cayman Tung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cayman Tung Ling has no effect on the direction of Hon Hai i.e., Hon Hai and Cayman Tung go up and down completely randomly.
Pair Corralation between Hon Hai and Cayman Tung
Assuming the 90 days trading horizon Hon Hai Precision is expected to generate 0.57 times more return on investment than Cayman Tung. However, Hon Hai Precision is 1.76 times less risky than Cayman Tung. It trades about 0.09 of its potential returns per unit of risk. Cayman Tung Ling is currently generating about 0.02 per unit of risk. If you would invest 9,635 in Hon Hai Precision on September 3, 2024 and sell it today you would earn a total of 9,915 from holding Hon Hai Precision or generate 102.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hon Hai Precision vs. Cayman Tung Ling
Performance |
| Timeline |
| Hon Hai Precision |
| Cayman Tung Ling |
Hon Hai and Cayman Tung Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hon Hai and Cayman Tung
The main advantage of trading using opposite Hon Hai and Cayman Tung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hon Hai position performs unexpectedly, Cayman Tung 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 Cayman Tung will offset losses from the drop in Cayman Tung's long position.| Hon Hai vs. United Microelectronics | Hon Hai vs. MediaTek | Hon Hai vs. Chunghwa Telecom Co | Hon Hai vs. Delta Electronics |
| Cayman Tung vs. Carnival Industrial Corp | Cayman Tung vs. YuantaP shares Taiwan Top | Cayman Tung vs. YuantaP shares Taiwan Mid Cap | Cayman Tung vs. Fubon MSCI Taiwan |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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