Correlation Between Hon Hai and Yung Zip
Can any of the company-specific risk be diversified away by investing in both Hon Hai and Yung Zip 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 Yung Zip 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 Yung Zip Chemical, you can compare the effects of market volatilities on Hon Hai and Yung Zip 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 Yung Zip. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hon Hai and Yung Zip.
Diversification Opportunities for Hon Hai and Yung Zip
Pay attention - limited upside
The 3 months correlation between Hon and Yung is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Hon Hai Precision and Yung Zip Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yung Zip Chemical 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 Yung Zip. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yung Zip Chemical has no effect on the direction of Hon Hai i.e., Hon Hai and Yung Zip go up and down completely randomly.
Pair Corralation between Hon Hai and Yung Zip
Assuming the 90 days trading horizon Hon Hai Precision is expected to generate 0.86 times more return on investment than Yung Zip. However, Hon Hai Precision is 1.17 times less risky than Yung Zip. It trades about 0.09 of its potential returns per unit of risk. Yung Zip Chemical is currently generating about 0.0 per unit of risk. If you would invest 9,635 in Hon Hai Precision on September 3, 2024 and sell it today you would earn a total of 9,915 from holding Hon Hai Precision or generate 102.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hon Hai Precision vs. Yung Zip Chemical
Performance |
| Timeline |
| Hon Hai Precision |
| Yung Zip Chemical |
Hon Hai and Yung Zip Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hon Hai and Yung Zip
The main advantage of trading using opposite Hon Hai and Yung Zip positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hon Hai position performs unexpectedly, Yung Zip 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 Yung Zip will offset losses from the drop in Yung Zip's long position.| Hon Hai vs. United Microelectronics | Hon Hai vs. MediaTek | Hon Hai vs. Chunghwa Telecom Co | Hon Hai vs. Delta Electronics |
| Yung Zip vs. Sinphar Pharmaceutical Co | Yung Zip vs. WiseChip Semiconductor | Yung Zip vs. Novatek Microelectronics Corp | Yung Zip vs. Leader 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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