Correlation Between Hon Hai and E Ink
Can any of the company-specific risk be diversified away by investing in both Hon Hai and E Ink 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 E Ink 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 E Ink Holdings, you can compare the effects of market volatilities on Hon Hai and E Ink 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 E Ink. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hon Hai and E Ink.
Diversification Opportunities for Hon Hai and E Ink
Very weak diversification
The 3 months correlation between Hon and 8069 is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Hon Hai Precision and E Ink Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E Ink Holdings 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 E Ink. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E Ink Holdings has no effect on the direction of Hon Hai i.e., Hon Hai and E Ink go up and down completely randomly.
Pair Corralation between Hon Hai and E Ink
Assuming the 90 days trading horizon Hon Hai Precision is expected to generate 0.54 times more return on investment than E Ink. However, Hon Hai Precision is 1.84 times less risky than E Ink. It trades about 0.4 of its potential returns per unit of risk. E Ink Holdings is currently generating about -0.04 per unit of risk. If you would invest 16,550 in Hon Hai Precision on November 27, 2024 and sell it today you would earn a total of 1,850 from holding Hon Hai Precision or generate 11.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hon Hai Precision vs. E Ink Holdings
Performance |
| Timeline |
| Hon Hai Precision |
| E Ink Holdings |
Hon Hai and E Ink Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hon Hai and E Ink
The main advantage of trading using opposite Hon Hai and E Ink positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hon Hai position performs unexpectedly, E Ink 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 E Ink will offset losses from the drop in E Ink's long position.| Hon Hai vs. United Microelectronics | Hon Hai vs. MediaTek | Hon Hai vs. Chunghwa Telecom Co | Hon Hai vs. Delta Electronics |
| E Ink vs. Unimicron Technology Corp | E Ink vs. Innolux Corp | E Ink vs. Delta Electronics | E Ink 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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