Correlation Between Hon Hai and Tachan Securities
Can any of the company-specific risk be diversified away by investing in both Hon Hai and Tachan Securities 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 Tachan Securities 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 Tachan Securities Co, you can compare the effects of market volatilities on Hon Hai and Tachan Securities 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 Tachan Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hon Hai and Tachan Securities.
Diversification Opportunities for Hon Hai and Tachan Securities
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hon and Tachan is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Hon Hai Precision and Tachan Securities Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tachan Securities 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 Tachan Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tachan Securities has no effect on the direction of Hon Hai i.e., Hon Hai and Tachan Securities go up and down completely randomly.
Pair Corralation between Hon Hai and Tachan Securities
Assuming the 90 days trading horizon Hon Hai Precision is expected to under-perform the Tachan Securities. In addition to that, Hon Hai is 7.08 times more volatile than Tachan Securities Co. It trades about -0.04 of its total potential returns per unit of risk. Tachan Securities Co is currently generating about -0.1 per unit of volatility. If you would invest 1,920 in Tachan Securities Co on September 12, 2024 and sell it today you would lose (20.00) from holding Tachan Securities Co or give up 1.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hon Hai Precision vs. Tachan Securities Co
Performance |
| Timeline |
| Hon Hai Precision |
| Tachan Securities |
Hon Hai and Tachan Securities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hon Hai and Tachan Securities
The main advantage of trading using opposite Hon Hai and Tachan Securities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hon Hai position performs unexpectedly, Tachan Securities 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 Tachan Securities will offset losses from the drop in Tachan Securities' long position.| Hon Hai vs. United Microelectronics | Hon Hai vs. MediaTek | Hon Hai vs. Chunghwa Telecom Co | Hon Hai vs. Delta Electronics |
| Tachan Securities vs. IBF Financial Holdings | Tachan Securities vs. Capital Securities Corp | Tachan Securities vs. President Securities Corp | Tachan Securities vs. China Bills Finance |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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