Correlation Between Hon Hai and Pegatron Corp
Can any of the company-specific risk be diversified away by investing in both Hon Hai and Pegatron Corp 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 Pegatron Corp 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 Pegatron Corp, you can compare the effects of market volatilities on Hon Hai and Pegatron Corp 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 Pegatron Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hon Hai and Pegatron Corp.
Diversification Opportunities for Hon Hai and Pegatron Corp
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Hon and Pegatron is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Hon Hai Precision and Pegatron Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pegatron Corp 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 Pegatron Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pegatron Corp has no effect on the direction of Hon Hai i.e., Hon Hai and Pegatron Corp go up and down completely randomly.
Pair Corralation between Hon Hai and Pegatron Corp
Assuming the 90 days trading horizon Hon Hai Precision is expected to generate 1.42 times more return on investment than Pegatron Corp. However, Hon Hai is 1.42 times more volatile than Pegatron Corp. It trades about 0.4 of its potential returns per unit of risk. Pegatron Corp is currently generating about -0.02 per unit of risk. If you would invest 16,550 in Hon Hai Precision on November 27, 2024 and sell it today you would earn a total of 1,850 from holding Hon Hai Precision or generate 11.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hon Hai Precision vs. Pegatron Corp
Performance |
| Timeline |
| Hon Hai Precision |
| Pegatron Corp |
Hon Hai and Pegatron Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hon Hai and Pegatron Corp
The main advantage of trading using opposite Hon Hai and Pegatron Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hon Hai position performs unexpectedly, Pegatron Corp 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 Pegatron Corp will offset losses from the drop in Pegatron Corp's long position.| Hon Hai vs. United Microelectronics | Hon Hai vs. MediaTek | Hon Hai vs. Chunghwa Telecom Co | Hon Hai vs. Delta Electronics |
| Pegatron Corp vs. Wistron Corp | Pegatron Corp vs. Quanta Computer | Pegatron Corp vs. Compal Electronics | Pegatron Corp vs. Catcher Technology Co |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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