Correlation Between Hon Hai and FineMat Applied
Can any of the company-specific risk be diversified away by investing in both Hon Hai and FineMat Applied 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 FineMat Applied 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 FineMat Applied Materials, you can compare the effects of market volatilities on Hon Hai and FineMat Applied 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 FineMat Applied. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hon Hai and FineMat Applied.
Diversification Opportunities for Hon Hai and FineMat Applied
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hon and FineMat is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Hon Hai Precision and FineMat Applied Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FineMat Applied Materials 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 FineMat Applied. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FineMat Applied Materials has no effect on the direction of Hon Hai i.e., Hon Hai and FineMat Applied go up and down completely randomly.
Pair Corralation between Hon Hai and FineMat Applied
Assuming the 90 days trading horizon Hon Hai Precision is expected to generate 0.67 times more return on investment than FineMat Applied. However, Hon Hai Precision is 1.49 times less risky than FineMat Applied. It trades about 0.05 of its potential returns per unit of risk. FineMat Applied Materials is currently generating about 0.03 per unit of risk. If you would invest 17,200 in Hon Hai Precision on August 29, 2024 and sell it today you would earn a total of 2,450 from holding Hon Hai Precision or generate 14.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hon Hai Precision vs. FineMat Applied Materials
Performance |
| Timeline |
| Hon Hai Precision |
| FineMat Applied Materials |
Hon Hai and FineMat Applied Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hon Hai and FineMat Applied
The main advantage of trading using opposite Hon Hai and FineMat Applied positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hon Hai position performs unexpectedly, FineMat Applied 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 FineMat Applied will offset losses from the drop in FineMat Applied's long position.| Hon Hai vs. United Microelectronics | Hon Hai vs. MediaTek | Hon Hai vs. Chunghwa Telecom Co | Hon Hai vs. Delta Electronics |
| FineMat Applied vs. Hon Hai Precision | FineMat Applied vs. Delta Electronics | FineMat Applied vs. LARGAN Precision Co | FineMat Applied vs. E Ink Holdings |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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