Correlation Between Amphenol and Hon Hai
Can any of the company-specific risk be diversified away by investing in both Amphenol 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 Amphenol and Hon Hai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amphenol and Hon Hai Precision, you can compare the effects of market volatilities on Amphenol 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 Amphenol with a short position of Hon Hai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amphenol and Hon Hai.
Diversification Opportunities for Amphenol and Hon Hai
Poor diversification
The 3 months correlation between Amphenol and Hon is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Amphenol 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 Amphenol 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 Amphenol 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 Amphenol i.e., Amphenol and Hon Hai go up and down completely randomly.
Pair Corralation between Amphenol and Hon Hai
Considering the 90-day investment horizon Amphenol is expected to generate 1.01 times more return on investment than Hon Hai. However, Amphenol is 1.01 times more volatile than Hon Hai Precision. It trades about 0.18 of its potential returns per unit of risk. Hon Hai Precision is currently generating about -0.19 per unit of risk. If you would invest 6,888 in Amphenol on August 30, 2024 and sell it today you would earn a total of 438.00 from holding Amphenol or generate 6.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Amphenol vs. Hon Hai Precision
Performance |
| Timeline |
| Amphenol |
| Hon Hai Precision |
Amphenol and Hon Hai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amphenol and Hon Hai
The main advantage of trading using opposite Amphenol and Hon Hai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amphenol 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.| Amphenol vs. Fabrinet | Amphenol vs. Knowles Cor | Amphenol vs. Ubiquiti Networks | Amphenol vs. AmpliTech Group |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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