Correlation Between Hon Hai and Century Iron
Can any of the company-specific risk be diversified away by investing in both Hon Hai and Century Iron 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 Century Iron 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 Century Iron And, you can compare the effects of market volatilities on Hon Hai and Century Iron 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 Century Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hon Hai and Century Iron.
Diversification Opportunities for Hon Hai and Century Iron
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hon and Century is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Hon Hai Precision and Century Iron And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Iron And 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 Century Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Iron And has no effect on the direction of Hon Hai i.e., Hon Hai and Century Iron go up and down completely randomly.
Pair Corralation between Hon Hai and Century Iron
Assuming the 90 days trading horizon Hon Hai Precision is expected to generate 0.75 times more return on investment than Century Iron. However, Hon Hai Precision is 1.33 times less risky than Century Iron. It trades about -0.15 of its potential returns per unit of risk. Century Iron And is currently generating about -0.25 per unit of risk. If you would invest 20,950 in Hon Hai Precision on August 30, 2024 and sell it today you would lose (1,300) from holding Hon Hai Precision or give up 6.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hon Hai Precision vs. Century Iron And
Performance |
| Timeline |
| Hon Hai Precision |
| Century Iron And |
Hon Hai and Century Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hon Hai and Century Iron
The main advantage of trading using opposite Hon Hai and Century Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hon Hai position performs unexpectedly, Century Iron 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 Century Iron will offset losses from the drop in Century Iron's long position.| Hon Hai vs. United Microelectronics | Hon Hai vs. MediaTek | Hon Hai vs. Chunghwa Telecom Co | Hon Hai vs. Delta Electronics |
| Century Iron vs. Swancor Holding Co | Century Iron vs. Hsin Kuang Steel | Century Iron vs. Ta Chen Stainless | Century Iron vs. Chung Hung Steel |
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 CEOs Directory module to screen CEOs from public companies around the world.
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