Correlation Between Altek Corp and Hon Hai
Can any of the company-specific risk be diversified away by investing in both Altek Corp 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 Altek Corp and Hon Hai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Altek Corp and Hon Hai Precision, you can compare the effects of market volatilities on Altek Corp 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 Altek Corp with a short position of Hon Hai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altek Corp and Hon Hai.
Diversification Opportunities for Altek Corp and Hon Hai
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Altek and Hon is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Altek Corp 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 Altek Corp 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 Altek Corp 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 Altek Corp i.e., Altek Corp and Hon Hai go up and down completely randomly.
Pair Corralation between Altek Corp and Hon Hai
Assuming the 90 days trading horizon Altek Corp is expected to under-perform the Hon Hai. But the stock apears to be less risky and, when comparing its historical volatility, Altek Corp is 1.39 times less risky than Hon Hai. The stock trades about -0.18 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 18,500 in Hon Hai Precision on September 3, 2024 and sell it today you would earn a total of 1,050 from holding Hon Hai Precision or generate 5.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Altek Corp vs. Hon Hai Precision
Performance |
| Timeline |
| Altek Corp |
| Hon Hai Precision |
Altek Corp and Hon Hai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Altek Corp and Hon Hai
The main advantage of trading using opposite Altek Corp and Hon Hai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Altek Corp 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.| Altek Corp vs. Ability Enterprise Co | Altek Corp vs. Sunplus Technology Co | Altek Corp vs. ALi Corp | Altek Corp vs. Edom Technology Co |
| 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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