Correlation Between Hon Hai and Neo Neon
Can any of the company-specific risk be diversified away by investing in both Hon Hai and Neo Neon 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 Neo Neon 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 Neo Neon Holdings Limited, you can compare the effects of market volatilities on Hon Hai and Neo Neon 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 Neo Neon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hon Hai and Neo Neon.
Diversification Opportunities for Hon Hai and Neo Neon
Modest diversification
The 3 months correlation between Hon and Neo is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Hon Hai Precision and Neo Neon Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neo Neon 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 Neo Neon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neo Neon Holdings has no effect on the direction of Hon Hai i.e., Hon Hai and Neo Neon go up and down completely randomly.
Pair Corralation between Hon Hai and Neo Neon
Assuming the 90 days trading horizon Hon Hai Precision is expected to generate 1.01 times more return on investment than Neo Neon. However, Hon Hai is 1.01 times more volatile than Neo Neon Holdings Limited. It trades about 0.08 of its potential returns per unit of risk. Neo Neon Holdings Limited is currently generating about 0.02 per unit of risk. If you would invest 17,750 in Hon Hai Precision on September 12, 2024 and sell it today you would earn a total of 1,450 from holding Hon Hai Precision or generate 8.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hon Hai Precision vs. Neo Neon Holdings Limited
Performance |
| Timeline |
| Hon Hai Precision |
| Neo Neon Holdings |
Hon Hai and Neo Neon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hon Hai and Neo Neon
The main advantage of trading using opposite Hon Hai and Neo Neon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hon Hai position performs unexpectedly, Neo Neon 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 Neo Neon will offset losses from the drop in Neo Neon's long position.| Hon Hai vs. United Microelectronics | Hon Hai vs. MediaTek | Hon Hai vs. Chunghwa Telecom Co | Hon Hai vs. Delta Electronics |
| Neo Neon vs. ANJI Technology Co | Neo Neon vs. Emerging Display Technologies | Neo Neon vs. U Tech Media Corp | Neo Neon vs. Ruentex Development 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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