Correlation Between Hon Hai and Concraft Holding
Can any of the company-specific risk be diversified away by investing in both Hon Hai and Concraft Holding 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 Concraft Holding 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 Concraft Holding Co, you can compare the effects of market volatilities on Hon Hai and Concraft Holding 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 Concraft Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hon Hai and Concraft Holding.
Diversification Opportunities for Hon Hai and Concraft Holding
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hon and Concraft is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Hon Hai Precision and Concraft Holding Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Concraft Holding 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 Concraft Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Concraft Holding has no effect on the direction of Hon Hai i.e., Hon Hai and Concraft Holding go up and down completely randomly.
Pair Corralation between Hon Hai and Concraft Holding
Assuming the 90 days trading horizon Hon Hai Precision is expected to generate 0.92 times more return on investment than Concraft Holding. However, Hon Hai Precision is 1.08 times less risky than Concraft Holding. It trades about 0.22 of its potential returns per unit of risk. Concraft Holding Co is currently generating about -0.08 per unit of risk. If you would invest 16,550 in Hon Hai Precision on November 28, 2024 and sell it today you would earn a total of 1,200 from holding Hon Hai Precision or generate 7.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
Hon Hai Precision vs. Concraft Holding Co
Performance |
| Timeline |
| Hon Hai Precision |
| Concraft Holding |
Hon Hai and Concraft Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hon Hai and Concraft Holding
The main advantage of trading using opposite Hon Hai and Concraft Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hon Hai position performs unexpectedly, Concraft Holding 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 Concraft Holding will offset losses from the drop in Concraft Holding's long position.| Hon Hai vs. United Microelectronics | Hon Hai vs. MediaTek | Hon Hai vs. Chunghwa Telecom Co | Hon Hai vs. Delta Electronics |
| Concraft Holding vs. Merry Electronics Co | Concraft Holding vs. Flexium Interconnect | Concraft Holding vs. General Interface Solution | Concraft Holding vs. Genius Electronic Optical |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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