Correlation Between American Aires and Hon Hai
Can any of the company-specific risk be diversified away by investing in both American Aires 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 American Aires and Hon Hai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Aires and Hon Hai Precision, you can compare the effects of market volatilities on American Aires 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 American Aires with a short position of Hon Hai. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Aires and Hon Hai.
Diversification Opportunities for American Aires and Hon Hai
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between American and Hon is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding American Aires 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 American Aires 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 American Aires 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 American Aires i.e., American Aires and Hon Hai go up and down completely randomly.
Pair Corralation between American Aires and Hon Hai
Assuming the 90 days horizon American Aires is expected to under-perform the Hon Hai. In addition to that, American Aires is 4.08 times more volatile than Hon Hai Precision. It trades about -0.06 of its total potential returns per unit of risk. Hon Hai Precision is currently generating about 0.04 per unit of volatility. If you would invest 1,123 in Hon Hai Precision on August 24, 2024 and sell it today you would earn a total of 117.00 from holding Hon Hai Precision or generate 10.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
American Aires vs. Hon Hai Precision
Performance |
| Timeline |
| American Aires |
| Hon Hai Precision |
American Aires and Hon Hai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Aires and Hon Hai
The main advantage of trading using opposite American Aires and Hon Hai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Aires 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.| American Aires vs. alpha En | American Aires vs. Alps Electric Co | American Aires vs. Bitmine Immersion Technologies | American Aires vs. AT S Austria |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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