Correlation Between Hon Hai and Aspeed Technology
Can any of the company-specific risk be diversified away by investing in both Hon Hai and Aspeed Technology 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 Aspeed Technology 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 Aspeed Technology, you can compare the effects of market volatilities on Hon Hai and Aspeed Technology 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 Aspeed Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hon Hai and Aspeed Technology.
Diversification Opportunities for Hon Hai and Aspeed Technology
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hon and Aspeed is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Hon Hai Precision and Aspeed Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aspeed Technology 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 Aspeed Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aspeed Technology has no effect on the direction of Hon Hai i.e., Hon Hai and Aspeed Technology go up and down completely randomly.
Pair Corralation between Hon Hai and Aspeed Technology
Assuming the 90 days trading horizon Hon Hai Precision is expected to under-perform the Aspeed Technology. But the stock apears to be less risky and, when comparing its historical volatility, Hon Hai Precision is 1.87 times less risky than Aspeed Technology. The stock trades about -0.18 of its potential returns per unit of risk. The Aspeed Technology is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 420,000 in Aspeed Technology on August 31, 2024 and sell it today you would lose (19,500) from holding Aspeed Technology or give up 4.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hon Hai Precision vs. Aspeed Technology
Performance |
| Timeline |
| Hon Hai Precision |
| Aspeed Technology |
Hon Hai and Aspeed Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hon Hai and Aspeed Technology
The main advantage of trading using opposite Hon Hai and Aspeed Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hon Hai position performs unexpectedly, Aspeed Technology 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 Aspeed Technology will offset losses from the drop in Aspeed Technology's long position.| Hon Hai vs. United Microelectronics | Hon Hai vs. MediaTek | Hon Hai vs. Chunghwa Telecom Co | Hon Hai vs. Delta Electronics |
| Aspeed Technology vs. Taiwan Semiconductor Manufacturing | Aspeed Technology vs. MediaTek | Aspeed Technology vs. United Microelectronics | Aspeed Technology vs. Novatek Microelectronics Corp |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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