Correlation Between Hon Hai and Mildef Crete
Can any of the company-specific risk be diversified away by investing in both Hon Hai and Mildef Crete 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 Mildef Crete 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 Mildef Crete, you can compare the effects of market volatilities on Hon Hai and Mildef Crete 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 Mildef Crete. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hon Hai and Mildef Crete.
Diversification Opportunities for Hon Hai and Mildef Crete
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hon and Mildef is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Hon Hai Precision and Mildef Crete in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mildef Crete 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 Mildef Crete. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mildef Crete has no effect on the direction of Hon Hai i.e., Hon Hai and Mildef Crete go up and down completely randomly.
Pair Corralation between Hon Hai and Mildef Crete
Assuming the 90 days trading horizon Hon Hai Precision is expected to generate 1.54 times more return on investment than Mildef Crete. However, Hon Hai is 1.54 times more volatile than Mildef Crete. It trades about -0.15 of its potential returns per unit of risk. Mildef Crete is currently generating about -0.4 per unit of risk. If you would invest 20,950 in Hon Hai Precision on August 30, 2024 and sell it today you would lose (1,400) from holding Hon Hai Precision or give up 6.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hon Hai Precision vs. Mildef Crete
Performance |
| Timeline |
| Hon Hai Precision |
| Mildef Crete |
Hon Hai and Mildef Crete Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hon Hai and Mildef Crete
The main advantage of trading using opposite Hon Hai and Mildef Crete positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hon Hai position performs unexpectedly, Mildef Crete 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 Mildef Crete will offset losses from the drop in Mildef Crete's long position.| Hon Hai vs. United Microelectronics | Hon Hai vs. MediaTek | Hon Hai vs. Chunghwa Telecom Co | Hon Hai vs. Delta Electronics |
| Mildef Crete vs. Medigen Biotechnology | Mildef Crete vs. Wei Chuan Foods | Mildef Crete vs. Otsuka Information Technology | Mildef Crete vs. Golden Biotechnology |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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