Correlation Between Hon Hai and Wellell
Can any of the company-specific risk be diversified away by investing in both Hon Hai and Wellell 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 Wellell 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 Wellell, you can compare the effects of market volatilities on Hon Hai and Wellell 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 Wellell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hon Hai and Wellell.
Diversification Opportunities for Hon Hai and Wellell
Very good diversification
The 3 months correlation between Hon and Wellell is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Hon Hai Precision and Wellell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wellell 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 Wellell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wellell has no effect on the direction of Hon Hai i.e., Hon Hai and Wellell go up and down completely randomly.
Pair Corralation between Hon Hai and Wellell
Assuming the 90 days trading horizon Hon Hai Precision is expected to under-perform the Wellell. In addition to that, Hon Hai is 2.72 times more volatile than Wellell. It trades about -0.24 of its total potential returns per unit of risk. Wellell is currently generating about -0.24 per unit of volatility. If you would invest 2,520 in Wellell on September 3, 2024 and sell it today you would lose (80.00) from holding Wellell or give up 3.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hon Hai Precision vs. Wellell
Performance |
| Timeline |
| Hon Hai Precision |
| Wellell |
Hon Hai and Wellell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hon Hai and Wellell
The main advantage of trading using opposite Hon Hai and Wellell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hon Hai position performs unexpectedly, Wellell 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 Wellell will offset losses from the drop in Wellell's long position.| Hon Hai vs. United Microelectronics | Hon Hai vs. MediaTek | Hon Hai vs. Chunghwa Telecom Co | Hon Hai vs. Delta Electronics |
| Wellell vs. Sinphar Pharmaceutical Co | Wellell vs. Excelsior Medical Co | Wellell vs. Abnova Taiwan Corp | Wellell vs. Phytohealth Corp |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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