Correlation Between Hon Hai and MedFirst Healthcare
Can any of the company-specific risk be diversified away by investing in both Hon Hai and MedFirst Healthcare 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 MedFirst Healthcare 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 MedFirst Healthcare Services, you can compare the effects of market volatilities on Hon Hai and MedFirst Healthcare 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 MedFirst Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hon Hai and MedFirst Healthcare.
Diversification Opportunities for Hon Hai and MedFirst Healthcare
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Hon and MedFirst is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Hon Hai Precision and MedFirst Healthcare Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MedFirst Healthcare 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 MedFirst Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MedFirst Healthcare has no effect on the direction of Hon Hai i.e., Hon Hai and MedFirst Healthcare go up and down completely randomly.
Pair Corralation between Hon Hai and MedFirst Healthcare
Assuming the 90 days trading horizon Hon Hai Precision is expected to under-perform the MedFirst Healthcare. In addition to that, Hon Hai is 3.25 times more volatile than MedFirst Healthcare Services. It trades about -0.11 of its total potential returns per unit of risk. MedFirst Healthcare Services is currently generating about -0.2 per unit of volatility. If you would invest 7,020 in MedFirst Healthcare Services on August 25, 2024 and sell it today you would lose (150.00) from holding MedFirst Healthcare Services or give up 2.14% 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. MedFirst Healthcare Services
Performance |
| Timeline |
| Hon Hai Precision |
| MedFirst Healthcare |
Hon Hai and MedFirst Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hon Hai and MedFirst Healthcare
The main advantage of trading using opposite Hon Hai and MedFirst Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hon Hai position performs unexpectedly, MedFirst Healthcare 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 MedFirst Healthcare will offset losses from the drop in MedFirst Healthcare's long position.| Hon Hai vs. United Microelectronics | Hon Hai vs. MediaTek | Hon Hai vs. Chunghwa Telecom Co | Hon Hai vs. Delta Electronics |
| MedFirst Healthcare vs. Goldsun Building Materials | MedFirst Healthcare vs. HiTi Digital | MedFirst Healthcare vs. YuantaP shares Taiwan Top | MedFirst Healthcare vs. YuantaP shares Taiwan Mid Cap |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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