Correlation Between Hon Hai and MetaTech
Can any of the company-specific risk be diversified away by investing in both Hon Hai and MetaTech 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 MetaTech 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 MetaTech AP, you can compare the effects of market volatilities on Hon Hai and MetaTech 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 MetaTech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hon Hai and MetaTech.
Diversification Opportunities for Hon Hai and MetaTech
Very good diversification
The 3 months correlation between Hon and MetaTech is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Hon Hai Precision and MetaTech AP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MetaTech AP 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 MetaTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MetaTech AP has no effect on the direction of Hon Hai i.e., Hon Hai and MetaTech go up and down completely randomly.
Pair Corralation between Hon Hai and MetaTech
Assuming the 90 days trading horizon Hon Hai Precision is expected to under-perform the MetaTech. In addition to that, Hon Hai is 1.18 times more volatile than MetaTech AP. It trades about -0.18 of its total potential returns per unit of risk. MetaTech AP is currently generating about -0.11 per unit of volatility. If you would invest 5,180 in MetaTech AP on October 22, 2024 and sell it today you would lose (195.00) from holding MetaTech AP or give up 3.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Hon Hai Precision vs. MetaTech AP
Performance |
| Timeline |
| Hon Hai Precision |
| MetaTech AP |
Hon Hai and MetaTech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hon Hai and MetaTech
The main advantage of trading using opposite Hon Hai and MetaTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hon Hai position performs unexpectedly, MetaTech 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 MetaTech will offset losses from the drop in MetaTech's long position.| Hon Hai vs. United Microelectronics | Hon Hai vs. MediaTek | Hon Hai vs. Chunghwa Telecom Co | Hon Hai vs. Delta Electronics |
| MetaTech vs. Far EasTone Telecommunications | MetaTech vs. Lihtai Construction Enterprise | MetaTech vs. Tradetool Auto Co | MetaTech vs. Grand Ocean Retail |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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