Correlation Between Hon Hai and Engie SA
Can any of the company-specific risk be diversified away by investing in both Hon Hai and Engie SA 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 Hon Hai and Engie SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hon Hai Precision and Engie SA, you can compare the effects of market volatilities on Hon Hai and Engie SA 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 Hon Hai with a short position of Engie SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hon Hai and Engie SA.
Diversification Opportunities for Hon Hai and Engie SA
Very good diversification
The 3 months correlation between Hon and Engie is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Hon Hai Precision and Engie SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Engie SA and Hon Hai 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 Hon Hai Precision are associated (or correlated) with Engie SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Engie SA has no effect on the direction of Hon Hai i.e., Hon Hai and Engie SA go up and down completely randomly.
Pair Corralation between Hon Hai and Engie SA
Assuming the 90 days trading horizon Hon Hai Precision is expected to generate 2.8 times more return on investment than Engie SA. However, Hon Hai is 2.8 times more volatile than Engie SA. It trades about 0.06 of its potential returns per unit of risk. Engie SA is currently generating about 0.04 per unit of risk. If you would invest 562.00 in Hon Hai Precision on September 3, 2024 and sell it today you would earn a total of 528.00 from holding Hon Hai Precision or generate 93.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hon Hai Precision vs. Engie SA
Performance |
| Timeline |
| Hon Hai Precision |
| Engie SA |
Hon Hai and Engie SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hon Hai and Engie SA
The main advantage of trading using opposite Hon Hai and Engie SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hon Hai position performs unexpectedly, Engie SA 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 Engie SA will offset losses from the drop in Engie SA's long position.| Hon Hai vs. Astral Foods Limited | Hon Hai vs. Food Life Companies | Hon Hai vs. ORMAT TECHNOLOGIES | Hon Hai vs. SENECA FOODS A |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| CEOs Directory Screen CEOs from public companies around the world |