Correlation Between Allied Circuit and Hon Hai
Can any of the company-specific risk be diversified away by investing in both Allied Circuit 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 Allied Circuit and Hon Hai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allied Circuit Co and Hon Hai Precision, you can compare the effects of market volatilities on Allied Circuit 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 Allied Circuit with a short position of Hon Hai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allied Circuit and Hon Hai.
Diversification Opportunities for Allied Circuit and Hon Hai
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Allied and Hon is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Allied Circuit 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 Allied Circuit 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 Allied Circuit 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 Allied Circuit i.e., Allied Circuit and Hon Hai go up and down completely randomly.
Pair Corralation between Allied Circuit and Hon Hai
Assuming the 90 days trading horizon Allied Circuit Co is expected to under-perform the Hon Hai. In addition to that, Allied Circuit is 1.72 times more volatile than Hon Hai Precision. It trades about -0.29 of its total potential returns per unit of risk. Hon Hai Precision is currently generating about -0.22 per unit of volatility. If you would invest 21,400 in Hon Hai Precision on September 4, 2024 and sell it today you would lose (1,750) from holding Hon Hai Precision or give up 8.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Allied Circuit Co vs. Hon Hai Precision
Performance |
| Timeline |
| Allied Circuit |
| Hon Hai Precision |
Allied Circuit and Hon Hai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allied Circuit and Hon Hai
The main advantage of trading using opposite Allied Circuit and Hon Hai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allied Circuit 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.| Allied Circuit vs. Hon Hai Precision | Allied Circuit vs. Delta Electronics | Allied Circuit vs. LARGAN Precision Co | Allied Circuit vs. AU Optronics |
| 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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