Correlation Between Hon Hai and Song Ho
Can any of the company-specific risk be diversified away by investing in both Hon Hai and Song Ho 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 Song Ho 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 Song Ho Industrial, you can compare the effects of market volatilities on Hon Hai and Song Ho 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 Song Ho. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hon Hai and Song Ho.
Diversification Opportunities for Hon Hai and Song Ho
Very good diversification
The 3 months correlation between Hon and Song is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Hon Hai Precision and Song Ho Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Song Ho Industrial 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 Song Ho. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Song Ho Industrial has no effect on the direction of Hon Hai i.e., Hon Hai and Song Ho go up and down completely randomly.
Pair Corralation between Hon Hai and Song Ho
Assuming the 90 days trading horizon Hon Hai Precision is expected to generate 3.19 times more return on investment than Song Ho. However, Hon Hai is 3.19 times more volatile than Song Ho Industrial. It trades about 0.09 of its potential returns per unit of risk. Song Ho Industrial is currently generating about -0.01 per unit of risk. If you would invest 10,541 in Hon Hai Precision on September 2, 2024 and sell it today you would earn a total of 9,009 from holding Hon Hai Precision or generate 85.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Hon Hai Precision vs. Song Ho Industrial
Performance |
| Timeline |
| Hon Hai Precision |
| Song Ho Industrial |
Hon Hai and Song Ho Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hon Hai and Song Ho
The main advantage of trading using opposite Hon Hai and Song Ho positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hon Hai position performs unexpectedly, Song Ho 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 Song Ho will offset losses from the drop in Song Ho's long position.| Hon Hai vs. United Microelectronics | Hon Hai vs. MediaTek | Hon Hai vs. Chunghwa Telecom Co | Hon Hai vs. Delta Electronics |
| Song Ho vs. Elite Semiconductor Memory | Song Ho vs. Founding Construction Development | Song Ho vs. uPI Semiconductor Corp | Song Ho vs. Hung Sheng Construction |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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