Correlation Between Hon Hai and Test Research
Can any of the company-specific risk be diversified away by investing in both Hon Hai and Test Research 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 Test Research 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 Test Research, you can compare the effects of market volatilities on Hon Hai and Test Research 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 Test Research. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hon Hai and Test Research.
Diversification Opportunities for Hon Hai and Test Research
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hon and Test is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Hon Hai Precision and Test Research in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Test Research 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 Test Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Test Research has no effect on the direction of Hon Hai i.e., Hon Hai and Test Research go up and down completely randomly.
Pair Corralation between Hon Hai and Test Research
Assuming the 90 days trading horizon Hon Hai Precision is expected to under-perform the Test Research. But the stock apears to be less risky and, when comparing its historical volatility, Hon Hai Precision is 1.86 times less risky than Test Research. The stock trades about -0.18 of its potential returns per unit of risk. The Test Research is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 13,400 in Test Research on September 1, 2024 and sell it today you would lose (400.00) from holding Test Research or give up 2.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Hon Hai Precision vs. Test Research
Performance |
| Timeline |
| Hon Hai Precision |
| Test Research |
Hon Hai and Test Research Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hon Hai and Test Research
The main advantage of trading using opposite Hon Hai and Test Research positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hon Hai position performs unexpectedly, Test Research 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 Test Research will offset losses from the drop in Test Research's long position.| Hon Hai vs. United Microelectronics | Hon Hai vs. MediaTek | Hon Hai vs. Chunghwa Telecom Co | Hon Hai vs. Delta Electronics |
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.
Other Complementary Tools
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |