Correlation Between Sunfon Construction and Hon Hai
Can any of the company-specific risk be diversified away by investing in both Sunfon Construction 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 Sunfon Construction and Hon Hai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sunfon Construction Co and Hon Hai Precision, you can compare the effects of market volatilities on Sunfon Construction 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 Sunfon Construction with a short position of Hon Hai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunfon Construction and Hon Hai.
Diversification Opportunities for Sunfon Construction and Hon Hai
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Sunfon and Hon is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Sunfon Construction Co 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 Sunfon Construction 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 Sunfon Construction Co 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 Sunfon Construction i.e., Sunfon Construction and Hon Hai go up and down completely randomly.
Pair Corralation between Sunfon Construction and Hon Hai
Assuming the 90 days trading horizon Sunfon Construction is expected to generate 6.71 times less return on investment than Hon Hai. But when comparing it to its historical volatility, Sunfon Construction Co is 1.12 times less risky than Hon Hai. It trades about 0.02 of its potential returns per unit of risk. 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 | Significant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Sunfon Construction Co vs. Hon Hai Precision
Performance |
| Timeline |
| Sunfon Construction |
| Hon Hai Precision |
Sunfon Construction and Hon Hai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunfon Construction and Hon Hai
The main advantage of trading using opposite Sunfon Construction and Hon Hai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunfon Construction 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.| Sunfon Construction vs. Compal Broadband Networks | Sunfon Construction vs. Great Computer | Sunfon Construction vs. U Media Communications | Sunfon Construction vs. Sunfar Computer 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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