Correlation Between OBI Pharma and Hon Hai
Can any of the company-specific risk be diversified away by investing in both OBI Pharma 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 OBI Pharma and Hon Hai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OBI Pharma and Hon Hai Precision, you can compare the effects of market volatilities on OBI Pharma 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 OBI Pharma with a short position of Hon Hai. Check out your portfolio center. Please also check ongoing floating volatility patterns of OBI Pharma and Hon Hai.
Diversification Opportunities for OBI Pharma and Hon Hai
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between OBI and Hon is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding OBI Pharma 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 OBI Pharma 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 OBI Pharma 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 OBI Pharma i.e., OBI Pharma and Hon Hai go up and down completely randomly.
Pair Corralation between OBI Pharma and Hon Hai
Assuming the 90 days trading horizon OBI Pharma is expected to under-perform the Hon Hai. But the stock apears to be less risky and, when comparing its historical volatility, OBI Pharma is 1.11 times less risky than Hon Hai. The stock trades about -0.04 of its potential returns per unit of risk. The Hon Hai Precision is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 10,207 in Hon Hai Precision on August 31, 2024 and sell it today you would earn a total of 9,343 from holding Hon Hai Precision or generate 91.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
OBI Pharma vs. Hon Hai Precision
Performance |
| Timeline |
| OBI Pharma |
| Hon Hai Precision |
OBI Pharma and Hon Hai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OBI Pharma and Hon Hai
The main advantage of trading using opposite OBI Pharma and Hon Hai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OBI Pharma 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.| OBI Pharma vs. TaiMed Biologics | OBI Pharma vs. PharmaEngine | OBI Pharma vs. Medigen Biotechnology | OBI Pharma vs. TTY Biopharm 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance |