Correlation Between Hon Hai and WiseChip Semiconductor
Can any of the company-specific risk be diversified away by investing in both Hon Hai and WiseChip Semiconductor 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 WiseChip Semiconductor 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 WiseChip Semiconductor, you can compare the effects of market volatilities on Hon Hai and WiseChip Semiconductor 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 WiseChip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hon Hai and WiseChip Semiconductor.
Diversification Opportunities for Hon Hai and WiseChip Semiconductor
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hon and WiseChip is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Hon Hai Precision and WiseChip Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WiseChip Semiconductor 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 WiseChip Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WiseChip Semiconductor has no effect on the direction of Hon Hai i.e., Hon Hai and WiseChip Semiconductor go up and down completely randomly.
Pair Corralation between Hon Hai and WiseChip Semiconductor
Assuming the 90 days trading horizon Hon Hai Precision is expected to generate 1.18 times more return on investment than WiseChip Semiconductor. However, Hon Hai is 1.18 times more volatile than WiseChip Semiconductor. It trades about 0.07 of its potential returns per unit of risk. WiseChip Semiconductor is currently generating about -0.22 per unit of risk. If you would invest 18,700 in Hon Hai Precision on September 3, 2024 and sell it today you would earn a total of 850.00 from holding Hon Hai Precision or generate 4.55% 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. WiseChip Semiconductor
Performance |
| Timeline |
| Hon Hai Precision |
| WiseChip Semiconductor |
Hon Hai and WiseChip Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hon Hai and WiseChip Semiconductor
The main advantage of trading using opposite Hon Hai and WiseChip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hon Hai position performs unexpectedly, WiseChip Semiconductor 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 WiseChip Semiconductor will offset losses from the drop in WiseChip Semiconductor's long position.| Hon Hai vs. United Microelectronics | Hon Hai vs. MediaTek | Hon Hai vs. Chunghwa Telecom Co | Hon Hai vs. Delta Electronics |
| WiseChip Semiconductor vs. Taiwan Semiconductor Manufacturing | WiseChip Semiconductor vs. Yang Ming Marine | WiseChip Semiconductor vs. ASE Industrial Holding | WiseChip Semiconductor 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
Other Complementary Tools
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Commodity Directory Find actively traded commodities issued by global exchanges |