Correlation Between Hon Hai and Asia Tech
Can any of the company-specific risk be diversified away by investing in both Hon Hai and Asia Tech 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 Asia Tech 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 Asia Tech Image, you can compare the effects of market volatilities on Hon Hai and Asia Tech 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 Asia Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hon Hai and Asia Tech.
Diversification Opportunities for Hon Hai and Asia Tech
Very good diversification
The 3 months correlation between Hon and Asia is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Hon Hai Precision and Asia Tech Image in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Tech Image 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 Asia Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Tech Image has no effect on the direction of Hon Hai i.e., Hon Hai and Asia Tech go up and down completely randomly.
Pair Corralation between Hon Hai and Asia Tech
Assuming the 90 days trading horizon Hon Hai Precision is expected to generate 1.17 times more return on investment than Asia Tech. However, Hon Hai is 1.17 times more volatile than Asia Tech Image. It trades about 0.09 of its potential returns per unit of risk. Asia Tech Image is currently generating about 0.08 per unit of risk. If you would invest 9,778 in Hon Hai Precision on September 4, 2024 and sell it today you would earn a total of 9,822 from holding Hon Hai Precision or generate 100.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hon Hai Precision vs. Asia Tech Image
Performance |
| Timeline |
| Hon Hai Precision |
| Asia Tech Image |
Hon Hai and Asia Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hon Hai and Asia Tech
The main advantage of trading using opposite Hon Hai and Asia Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hon Hai position performs unexpectedly, Asia Tech 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 Asia Tech will offset losses from the drop in Asia Tech's long position.| Hon Hai vs. United Microelectronics | Hon Hai vs. MediaTek | Hon Hai vs. Chunghwa Telecom Co | Hon Hai vs. Delta Electronics |
| Asia Tech vs. Hon Hai Precision | Asia Tech vs. Delta Electronics | Asia Tech vs. LARGAN Precision Co | Asia Tech vs. AU Optronics |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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