Correlation Between Sensortek Technology and Hon Hai
Can any of the company-specific risk be diversified away by investing in both Sensortek Technology 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 Sensortek Technology and Hon Hai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sensortek Technology Corp and Hon Hai Precision, you can compare the effects of market volatilities on Sensortek Technology 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 Sensortek Technology with a short position of Hon Hai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sensortek Technology and Hon Hai.
Diversification Opportunities for Sensortek Technology and Hon Hai
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sensortek and Hon is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Sensortek Technology 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 Sensortek Technology 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 Sensortek Technology 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 Sensortek Technology i.e., Sensortek Technology and Hon Hai go up and down completely randomly.
Pair Corralation between Sensortek Technology and Hon Hai
Assuming the 90 days trading horizon Sensortek Technology is expected to generate 1.48 times less return on investment than Hon Hai. But when comparing it to its historical volatility, Sensortek Technology Corp is 1.27 times less risky than Hon Hai. It trades about 0.19 of its potential returns per unit of risk. Hon Hai Precision is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 16,550 in Hon Hai Precision on November 28, 2024 and sell it today you would earn a total of 1,200 from holding Hon Hai Precision or generate 7.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sensortek Technology Corp vs. Hon Hai Precision
Performance |
| Timeline |
| Sensortek Technology Corp |
| Hon Hai Precision |
Sensortek Technology and Hon Hai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sensortek Technology and Hon Hai
The main advantage of trading using opposite Sensortek Technology and Hon Hai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sensortek Technology 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.| Sensortek Technology vs. Aspeed Technology | Sensortek Technology vs. Asmedia Technology | Sensortek Technology vs. eMemory Technology | Sensortek Technology vs. Sitronix Technology 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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