Correlation Between Acer and Hon Hai
Can any of the company-specific risk be diversified away by investing in both Acer and Hon Hai 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 Acer and Hon Hai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Acer Inc and Hon Hai Precision, you can compare the effects of market volatilities on Acer and Hon Hai 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 Acer with a short position of Hon Hai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acer and Hon Hai.
Diversification Opportunities for Acer and Hon Hai
Very good diversification
The 3 months correlation between Acer and Hon is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Acer Inc and Hon Hai Precision in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hon Hai Precision and Acer 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 Acer Inc are associated (or correlated) with Hon Hai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hon Hai Precision has no effect on the direction of Acer i.e., Acer and Hon Hai go up and down completely randomly.
Pair Corralation between Acer and Hon Hai
Assuming the 90 days trading horizon Acer Inc is expected to under-perform the Hon Hai. But the stock apears to be less risky and, when comparing its historical volatility, Acer Inc is 1.35 times less risky than Hon Hai. The stock trades about -0.13 of its potential returns per unit of risk. The Hon Hai Precision is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 17,200 in Hon Hai Precision on August 29, 2024 and sell it today you would earn a total of 2,450 from holding Hon Hai Precision or generate 14.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Acer Inc vs. Hon Hai Precision
Performance |
| Timeline |
| Acer Inc |
| Hon Hai Precision |
Acer and Hon Hai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Acer and Hon Hai
The main advantage of trading using opposite Acer and Hon Hai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acer position performs unexpectedly, Hon Hai 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 Hon Hai will offset losses from the drop in Hon Hai's long position.| Acer vs. Sitronix Technology Corp | Acer vs. Elan Microelectronics Corp | Acer vs. Global Unichip Corp | Acer vs. Holtek Semiconductor |
| Hon Hai vs. United Microelectronics | Hon Hai vs. MediaTek | Hon Hai vs. Chunghwa Telecom Co | Hon Hai vs. Delta Electronics |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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