Correlation Between Allegheny Technologies and Hon Hai
Can any of the company-specific risk be diversified away by investing in both Allegheny Technologies 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 Allegheny Technologies and Hon Hai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allegheny Technologies Incorporated and Hon Hai Precision, you can compare the effects of market volatilities on Allegheny Technologies 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 Allegheny Technologies with a short position of Hon Hai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allegheny Technologies and Hon Hai.
Diversification Opportunities for Allegheny Technologies and Hon Hai
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Allegheny and Hon is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Allegheny Technologies Incorpo 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 Allegheny Technologies 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 Allegheny Technologies Incorporated 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 Allegheny Technologies i.e., Allegheny Technologies and Hon Hai go up and down completely randomly.
Pair Corralation between Allegheny Technologies and Hon Hai
Assuming the 90 days trading horizon Allegheny Technologies is expected to generate 1.54 times less return on investment than Hon Hai. But when comparing it to its historical volatility, Allegheny Technologies Incorporated is 1.63 times less risky than Hon Hai. It trades about 0.08 of its potential returns per unit of risk. Hon Hai Precision is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 584.00 in Hon Hai Precision on November 4, 2024 and sell it today you would earn a total of 436.00 from holding Hon Hai Precision or generate 74.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Allegheny Technologies Incorpo vs. Hon Hai Precision
Performance |
| Timeline |
| Allegheny Technologies |
| Hon Hai Precision |
Allegheny Technologies and Hon Hai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allegheny Technologies and Hon Hai
The main advantage of trading using opposite Allegheny Technologies and Hon Hai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allegheny Technologies 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.| Allegheny Technologies vs. SCIENCE IN SPORT | Allegheny Technologies vs. SOEDER SPORTFISKE AB | Allegheny Technologies vs. PLAY2CHILL SA ZY | Allegheny Technologies vs. LG Display Co |
| Hon Hai vs. Cogent Communications Holdings | Hon Hai vs. CRISPR Therapeutics AG | Hon Hai vs. Siamgas And Petrochemicals | Hon Hai vs. Zoom Video Communications |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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