Correlation Between United Radiant and Hon Hai
Can any of the company-specific risk be diversified away by investing in both United Radiant 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 United Radiant and Hon Hai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Radiant Technology and Hon Hai Precision, you can compare the effects of market volatilities on United Radiant 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 United Radiant with a short position of Hon Hai. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Radiant and Hon Hai.
Diversification Opportunities for United Radiant and Hon Hai
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Hon is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding United Radiant Technology 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 United Radiant 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 United Radiant Technology 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 United Radiant i.e., United Radiant and Hon Hai go up and down completely randomly.
Pair Corralation between United Radiant and Hon Hai
Assuming the 90 days trading horizon United Radiant Technology is expected to generate 0.63 times more return on investment than Hon Hai. However, United Radiant Technology is 1.58 times less risky than Hon Hai. It trades about 0.06 of its potential returns per unit of risk. Hon Hai Precision is currently generating about -0.06 per unit of risk. If you would invest 2,015 in United Radiant Technology on November 30, 2024 and sell it today you would earn a total of 65.00 from holding United Radiant Technology or generate 3.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Radiant Technology vs. Hon Hai Precision
Performance |
| Timeline |
| United Radiant Technology |
| Hon Hai Precision |
United Radiant and Hon Hai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Radiant and Hon Hai
The main advantage of trading using opposite United Radiant and Hon Hai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Radiant 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.| United Radiant vs. Shanghai Commercial Savings | United Radiant vs. International CSRC Investment | United Radiant vs. U Ming Marine Transport | United Radiant vs. Standard Foods Corp |
| 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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