Correlation Between Hon Hai and Pernod Ricard
Can any of the company-specific risk be diversified away by investing in both Hon Hai and Pernod Ricard 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 Pernod Ricard 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 Pernod Ricard SA, you can compare the effects of market volatilities on Hon Hai and Pernod Ricard 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 Pernod Ricard. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hon Hai and Pernod Ricard.
Diversification Opportunities for Hon Hai and Pernod Ricard
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hon and Pernod is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Hon Hai Precision and Pernod Ricard SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pernod Ricard 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 Pernod Ricard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pernod Ricard SA has no effect on the direction of Hon Hai i.e., Hon Hai and Pernod Ricard go up and down completely randomly.
Pair Corralation between Hon Hai and Pernod Ricard
Assuming the 90 days trading horizon Hon Hai Precision is expected to generate 1.56 times more return on investment than Pernod Ricard. However, Hon Hai is 1.56 times more volatile than Pernod Ricard SA. It trades about -0.06 of its potential returns per unit of risk. Pernod Ricard SA is currently generating about -0.29 per unit of risk. If you would invest 1,230 in Hon Hai Precision on August 29, 2024 and sell it today you would lose (60.00) from holding Hon Hai Precision or give up 4.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Hon Hai Precision vs. Pernod Ricard SA
Performance |
| Timeline |
| Hon Hai Precision |
| Pernod Ricard SA |
Hon Hai and Pernod Ricard Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hon Hai and Pernod Ricard
The main advantage of trading using opposite Hon Hai and Pernod Ricard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hon Hai position performs unexpectedly, Pernod Ricard 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 Pernod Ricard will offset losses from the drop in Pernod Ricard's long position.| Hon Hai vs. Lion One Metals | Hon Hai vs. WisdomTree Investments | Hon Hai vs. Jacquet Metal Service | Hon Hai vs. REGAL ASIAN INVESTMENTS |
| Pernod Ricard vs. Superior Plus Corp | Pernod Ricard vs. NMI Holdings | Pernod Ricard vs. Origin Agritech | Pernod Ricard vs. SIVERS SEMICONDUCTORS AB |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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