Correlation Between Hon Hai and Bioteque
Can any of the company-specific risk be diversified away by investing in both Hon Hai and Bioteque 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 Bioteque 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 Bioteque, you can compare the effects of market volatilities on Hon Hai and Bioteque 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 Bioteque. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hon Hai and Bioteque.
Diversification Opportunities for Hon Hai and Bioteque
Excellent diversification
The 3 months correlation between Hon and Bioteque is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Hon Hai Precision and Bioteque in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bioteque 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 Bioteque. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bioteque has no effect on the direction of Hon Hai i.e., Hon Hai and Bioteque go up and down completely randomly.
Pair Corralation between Hon Hai and Bioteque
Assuming the 90 days trading horizon Hon Hai Precision is expected to under-perform the Bioteque. In addition to that, Hon Hai is 2.96 times more volatile than Bioteque. It trades about -0.23 of its total potential returns per unit of risk. Bioteque is currently generating about 0.16 per unit of volatility. If you would invest 12,350 in Bioteque on September 3, 2024 and sell it today you would earn a total of 250.00 from holding Bioteque or generate 2.02% 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. Bioteque
Performance |
| Timeline |
| Hon Hai Precision |
| Bioteque |
Hon Hai and Bioteque Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hon Hai and Bioteque
The main advantage of trading using opposite Hon Hai and Bioteque positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hon Hai position performs unexpectedly, Bioteque 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 Bioteque will offset losses from the drop in Bioteque's long position.| Hon Hai vs. United Microelectronics | Hon Hai vs. MediaTek | Hon Hai vs. Chunghwa Telecom Co | Hon Hai vs. Delta Electronics |
| Bioteque vs. SciVision Biotech | Bioteque vs. WiseChip Semiconductor | Bioteque vs. Novatek Microelectronics Corp | Bioteque 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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