Correlation Between Hon Hai and CHC Resources
Can any of the company-specific risk be diversified away by investing in both Hon Hai and CHC Resources 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 CHC Resources 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 CHC Resources Corp, you can compare the effects of market volatilities on Hon Hai and CHC Resources 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 CHC Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hon Hai and CHC Resources.
Diversification Opportunities for Hon Hai and CHC Resources
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hon and CHC is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Hon Hai Precision and CHC Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHC Resources Corp 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 CHC Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHC Resources Corp has no effect on the direction of Hon Hai i.e., Hon Hai and CHC Resources go up and down completely randomly.
Pair Corralation between Hon Hai and CHC Resources
Assuming the 90 days trading horizon Hon Hai Precision is expected to under-perform the CHC Resources. In addition to that, Hon Hai is 2.14 times more volatile than CHC Resources Corp. It trades about -0.12 of its total potential returns per unit of risk. CHC Resources Corp is currently generating about 0.02 per unit of volatility. If you would invest 6,610 in CHC Resources Corp on January 14, 2025 and sell it today you would earn a total of 140.00 from holding CHC Resources Corp or generate 2.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.97% |
| Values | Daily Returns |
Hon Hai Precision vs. CHC Resources Corp
Performance |
| Timeline |
| Hon Hai Precision |
| CHC Resources Corp |
Hon Hai and CHC Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hon Hai and CHC Resources
The main advantage of trading using opposite Hon Hai and CHC Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hon Hai position performs unexpectedly, CHC Resources 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 CHC Resources will offset losses from the drop in CHC Resources' long position.| Hon Hai vs. United Microelectronics | Hon Hai vs. MediaTek | Hon Hai vs. Chunghwa Telecom Co | Hon Hai vs. Delta Electronics |
| CHC Resources vs. Asia Polymer Corp | CHC Resources vs. Taiwan Styrene Monomer | CHC Resources vs. UPC Technology Corp | CHC Resources vs. USI 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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