Correlation Between Hon Hai and Averlogic Technologies
Can any of the company-specific risk be diversified away by investing in both Hon Hai and Averlogic Technologies 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 Averlogic Technologies 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 Averlogic Technologies, you can compare the effects of market volatilities on Hon Hai and Averlogic Technologies 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 Averlogic Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hon Hai and Averlogic Technologies.
Diversification Opportunities for Hon Hai and Averlogic Technologies
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Hon and Averlogic is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Hon Hai Precision and Averlogic Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Averlogic Technologies 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 Averlogic Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Averlogic Technologies has no effect on the direction of Hon Hai i.e., Hon Hai and Averlogic Technologies go up and down completely randomly.
Pair Corralation between Hon Hai and Averlogic Technologies
Assuming the 90 days trading horizon Hon Hai is expected to generate 1.32 times less return on investment than Averlogic Technologies. But when comparing it to its historical volatility, Hon Hai Precision is 1.68 times less risky than Averlogic Technologies. It trades about 0.09 of its potential returns per unit of risk. Averlogic Technologies is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,800 in Averlogic Technologies on September 3, 2024 and sell it today you would earn a total of 2,345 from holding Averlogic Technologies or generate 130.28% 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. Averlogic Technologies
Performance |
| Timeline |
| Hon Hai Precision |
| Averlogic Technologies |
Hon Hai and Averlogic Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hon Hai and Averlogic Technologies
The main advantage of trading using opposite Hon Hai and Averlogic Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hon Hai position performs unexpectedly, Averlogic Technologies 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 Averlogic Technologies will offset losses from the drop in Averlogic Technologies' long position.| Hon Hai vs. United Microelectronics | Hon Hai vs. MediaTek | Hon Hai vs. Chunghwa Telecom Co | Hon Hai vs. Delta Electronics |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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