Correlation Between Hon Hai and NEXCOM International
Can any of the company-specific risk be diversified away by investing in both Hon Hai and NEXCOM International 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 NEXCOM International 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 NEXCOM International Co, you can compare the effects of market volatilities on Hon Hai and NEXCOM International 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 NEXCOM International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hon Hai and NEXCOM International.
Diversification Opportunities for Hon Hai and NEXCOM International
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hon and NEXCOM is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Hon Hai Precision and NEXCOM International Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEXCOM International 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 NEXCOM International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEXCOM International has no effect on the direction of Hon Hai i.e., Hon Hai and NEXCOM International go up and down completely randomly.
Pair Corralation between Hon Hai and NEXCOM International
Assuming the 90 days trading horizon Hon Hai Precision is expected to under-perform the NEXCOM International. But the stock apears to be less risky and, when comparing its historical volatility, Hon Hai Precision is 1.13 times less risky than NEXCOM International. The stock trades about -0.05 of its potential returns per unit of risk. The NEXCOM International Co is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 5,040 in NEXCOM International Co on August 27, 2024 and sell it today you would earn a total of 220.00 from holding NEXCOM International Co or generate 4.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hon Hai Precision vs. NEXCOM International Co
Performance |
| Timeline |
| Hon Hai Precision |
| NEXCOM International |
Hon Hai and NEXCOM International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hon Hai and NEXCOM International
The main advantage of trading using opposite Hon Hai and NEXCOM International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hon Hai position performs unexpectedly, NEXCOM International 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 NEXCOM International will offset losses from the drop in NEXCOM International's long position.| Hon Hai vs. United Microelectronics | Hon Hai vs. MediaTek | Hon Hai vs. Chunghwa Telecom Co | Hon Hai vs. Delta Electronics |
| NEXCOM International vs. Advantech Co | NEXCOM International vs. Asustek Computer | NEXCOM International vs. Lite On Technology Corp | NEXCOM International vs. Micro Star International Co |
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.
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |