Correlation Between Hon Hai and Altek Corp
Can any of the company-specific risk be diversified away by investing in both Hon Hai and Altek Corp 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 Altek Corp 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 Altek Corp, you can compare the effects of market volatilities on Hon Hai and Altek Corp 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 Altek Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hon Hai and Altek Corp.
Diversification Opportunities for Hon Hai and Altek Corp
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hon and Altek is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Hon Hai Precision and Altek Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altek Corp 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 Altek Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altek Corp has no effect on the direction of Hon Hai i.e., Hon Hai and Altek Corp go up and down completely randomly.
Pair Corralation between Hon Hai and Altek Corp
Assuming the 90 days trading horizon Hon Hai Precision is expected to generate 0.99 times more return on investment than Altek Corp. However, Hon Hai Precision is 1.01 times less risky than Altek Corp. It trades about 0.09 of its potential returns per unit of risk. Altek Corp is currently generating about 0.0 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hon Hai Precision vs. Altek Corp
Performance |
| Timeline |
| Hon Hai Precision |
| Altek Corp |
Hon Hai and Altek Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hon Hai and Altek Corp
The main advantage of trading using opposite Hon Hai and Altek Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hon Hai position performs unexpectedly, Altek Corp 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 Altek Corp will offset losses from the drop in Altek Corp's long position.| Hon Hai vs. United Microelectronics | Hon Hai vs. MediaTek | Hon Hai vs. Chunghwa Telecom Co | Hon Hai vs. Delta Electronics |
| Altek Corp vs. Chaintech Technology Corp | Altek Corp vs. AVerMedia Technologies | Altek Corp vs. Avision | Altek Corp 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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