Correlation Between Far EasTone and Hannstar Display
Can any of the company-specific risk be diversified away by investing in both Far EasTone and Hannstar Display 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 Far EasTone and Hannstar Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Far EasTone Telecommunications and Hannstar Display Corp, you can compare the effects of market volatilities on Far EasTone and Hannstar Display 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 Far EasTone with a short position of Hannstar Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Far EasTone and Hannstar Display.
Diversification Opportunities for Far EasTone and Hannstar Display
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Far and Hannstar is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Far EasTone Telecommunications and Hannstar Display Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hannstar Display Corp and Far EasTone 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 Far EasTone Telecommunications are associated (or correlated) with Hannstar Display. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hannstar Display Corp has no effect on the direction of Far EasTone i.e., Far EasTone and Hannstar Display go up and down completely randomly.
Pair Corralation between Far EasTone and Hannstar Display
Assuming the 90 days trading horizon Far EasTone Telecommunications is expected to generate 0.77 times more return on investment than Hannstar Display. However, Far EasTone Telecommunications is 1.3 times less risky than Hannstar Display. It trades about 0.06 of its potential returns per unit of risk. Hannstar Display Corp is currently generating about -0.06 per unit of risk. If you would invest 8,350 in Far EasTone Telecommunications on August 29, 2024 and sell it today you would earn a total of 820.00 from holding Far EasTone Telecommunications or generate 9.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Far EasTone Telecommunications vs. Hannstar Display Corp
Performance |
| Timeline |
| Far EasTone Telecomm |
| Hannstar Display Corp |
Far EasTone and Hannstar Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Far EasTone and Hannstar Display
The main advantage of trading using opposite Far EasTone and Hannstar Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Far EasTone position performs unexpectedly, Hannstar Display 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 Hannstar Display will offset losses from the drop in Hannstar Display's long position.| Far EasTone vs. Taiwan Mobile Co | Far EasTone vs. Chunghwa Telecom Co | Far EasTone vs. President Chain Store | Far EasTone vs. Formosa Petrochemical Corp |
| Hannstar Display vs. Sitronix Technology Corp | Hannstar Display vs. Elan Microelectronics Corp | Hannstar Display vs. Global Unichip Corp | Hannstar Display vs. Holtek Semiconductor |
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 Stocks Directory module to find actively traded stocks across global markets.
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