Correlation Between Hon Hai and LARGAN Precision
Can any of the company-specific risk be diversified away by investing in both Hon Hai and LARGAN Precision 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 LARGAN Precision 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 LARGAN Precision Co, you can compare the effects of market volatilities on Hon Hai and LARGAN Precision 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 LARGAN Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hon Hai and LARGAN Precision.
Diversification Opportunities for Hon Hai and LARGAN Precision
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Hon and LARGAN is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Hon Hai Precision and LARGAN Precision Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LARGAN Precision 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 LARGAN Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LARGAN Precision has no effect on the direction of Hon Hai i.e., Hon Hai and LARGAN Precision go up and down completely randomly.
Pair Corralation between Hon Hai and LARGAN Precision
Assuming the 90 days trading horizon Hon Hai Precision is expected to generate 1.01 times more return on investment than LARGAN Precision. However, Hon Hai is 1.01 times more volatile than LARGAN Precision Co. It trades about 0.09 of its potential returns per unit of risk. LARGAN Precision Co is currently generating about 0.03 per unit of risk. If you would invest 10,207 in Hon Hai Precision on August 31, 2024 and sell it today you would earn a total of 9,343 from holding Hon Hai Precision or generate 91.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Hon Hai Precision vs. LARGAN Precision Co
Performance |
| Timeline |
| Hon Hai Precision |
| LARGAN Precision |
Hon Hai and LARGAN Precision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hon Hai and LARGAN Precision
The main advantage of trading using opposite Hon Hai and LARGAN Precision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hon Hai position performs unexpectedly, LARGAN Precision 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 LARGAN Precision will offset losses from the drop in LARGAN Precision's long position.| Hon Hai vs. United Microelectronics | Hon Hai vs. MediaTek | Hon Hai vs. Chunghwa Telecom Co | Hon Hai vs. Delta Electronics |
| LARGAN Precision vs. MediaTek | LARGAN Precision vs. Hon Hai Precision | LARGAN Precision vs. Delta Electronics | LARGAN Precision vs. Catcher Technology 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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