Correlation Between BJs Wholesale and Hon Hai
Can any of the company-specific risk be diversified away by investing in both BJs Wholesale 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 BJs Wholesale and Hon Hai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BJs Wholesale Club and Hon Hai Precision, you can compare the effects of market volatilities on BJs Wholesale 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 BJs Wholesale with a short position of Hon Hai. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Wholesale and Hon Hai.
Diversification Opportunities for BJs Wholesale and Hon Hai
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BJs and Hon is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding BJs Wholesale Club 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 BJs Wholesale 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 BJs Wholesale Club 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 BJs Wholesale i.e., BJs Wholesale and Hon Hai go up and down completely randomly.
Pair Corralation between BJs Wholesale and Hon Hai
Assuming the 90 days horizon BJs Wholesale Club is expected to generate 0.95 times more return on investment than Hon Hai. However, BJs Wholesale Club is 1.05 times less risky than Hon Hai. It trades about 0.18 of its potential returns per unit of risk. Hon Hai Precision is currently generating about -0.2 per unit of risk. If you would invest 8,400 in BJs Wholesale Club on September 12, 2024 and sell it today you would earn a total of 800.00 from holding BJs Wholesale Club or generate 9.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
BJs Wholesale Club vs. Hon Hai Precision
Performance |
| Timeline |
| BJs Wholesale Club |
| Hon Hai Precision |
BJs Wholesale and Hon Hai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Wholesale and Hon Hai
The main advantage of trading using opposite BJs Wholesale and Hon Hai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Wholesale 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.| BJs Wholesale vs. Walmart | BJs Wholesale vs. Costco Wholesale | BJs Wholesale vs. Dollarama | BJs Wholesale vs. Superior Plus Corp |
| Hon Hai vs. BJs Wholesale Club | Hon Hai vs. BURLINGTON STORES | Hon Hai vs. CEOTRONICS | Hon Hai vs. Corporate Travel Management |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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