Correlation Between Hon Hai and Kunyue Development
Can any of the company-specific risk be diversified away by investing in both Hon Hai and Kunyue Development 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 Kunyue Development 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 Kunyue Development Co, you can compare the effects of market volatilities on Hon Hai and Kunyue Development 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 Kunyue Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hon Hai and Kunyue Development.
Diversification Opportunities for Hon Hai and Kunyue Development
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Hon and Kunyue is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Hon Hai Precision and Kunyue Development Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kunyue Development 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 Kunyue Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kunyue Development has no effect on the direction of Hon Hai i.e., Hon Hai and Kunyue Development go up and down completely randomly.
Pair Corralation between Hon Hai and Kunyue Development
Assuming the 90 days trading horizon Hon Hai Precision is expected to generate 0.82 times more return on investment than Kunyue Development. However, Hon Hai Precision is 1.22 times less risky than Kunyue Development. It trades about 0.1 of its potential returns per unit of risk. Kunyue Development Co is currently generating about 0.08 per unit of risk. If you would invest 10,016 in Hon Hai Precision on August 27, 2024 and sell it today you would earn a total of 10,284 from holding Hon Hai Precision or generate 102.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hon Hai Precision vs. Kunyue Development Co
Performance |
| Timeline |
| Hon Hai Precision |
| Kunyue Development |
Hon Hai and Kunyue Development Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hon Hai and Kunyue Development
The main advantage of trading using opposite Hon Hai and Kunyue Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hon Hai position performs unexpectedly, Kunyue Development 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 Kunyue Development will offset losses from the drop in Kunyue Development's long position.| Hon Hai vs. United Microelectronics | Hon Hai vs. MediaTek | Hon Hai vs. Chunghwa Telecom Co | Hon Hai vs. Delta Electronics |
| Kunyue Development vs. Johnson Health Tech | Kunyue Development vs. SS Healthcare Holding | Kunyue Development vs. Pacific Hospital Supply | Kunyue Development vs. Chi Hua Fitness |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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