Correlation Between Hon Hai and GlobalWafers
Can any of the company-specific risk be diversified away by investing in both Hon Hai and GlobalWafers 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 GlobalWafers 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 GlobalWafers Co, you can compare the effects of market volatilities on Hon Hai and GlobalWafers 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 GlobalWafers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hon Hai and GlobalWafers.
Diversification Opportunities for Hon Hai and GlobalWafers
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Hon and GlobalWafers is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Hon Hai Precision and GlobalWafers Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GlobalWafers 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 GlobalWafers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GlobalWafers has no effect on the direction of Hon Hai i.e., Hon Hai and GlobalWafers go up and down completely randomly.
Pair Corralation between Hon Hai and GlobalWafers
Assuming the 90 days trading horizon Hon Hai Precision is expected to generate 1.33 times more return on investment than GlobalWafers. However, Hon Hai is 1.33 times more volatile than GlobalWafers Co. It trades about 0.04 of its potential returns per unit of risk. GlobalWafers Co is currently generating about -0.09 per unit of risk. If you would invest 17,650 in Hon Hai Precision on September 1, 2024 and sell it today you would earn a total of 1,900 from holding Hon Hai Precision or generate 10.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hon Hai Precision vs. GlobalWafers Co
Performance |
| Timeline |
| Hon Hai Precision |
| GlobalWafers |
Hon Hai and GlobalWafers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hon Hai and GlobalWafers
The main advantage of trading using opposite Hon Hai and GlobalWafers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hon Hai position performs unexpectedly, GlobalWafers 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 GlobalWafers will offset losses from the drop in GlobalWafers' long position.| Hon Hai vs. United Microelectronics | Hon Hai vs. MediaTek | Hon Hai vs. Chunghwa Telecom Co | Hon Hai vs. Delta Electronics |
| GlobalWafers vs. WIN Semiconductors | GlobalWafers vs. Sino American Silicon Products | GlobalWafers vs. Novatek Microelectronics Corp | GlobalWafers vs. Yageo 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites |