Correlation Between Hon Hai and Perusahaan Perseroan
Can any of the company-specific risk be diversified away by investing in both Hon Hai and Perusahaan Perseroan 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 Perusahaan Perseroan 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 Perusahaan Perseroan PT, you can compare the effects of market volatilities on Hon Hai and Perusahaan Perseroan 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 Perusahaan Perseroan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hon Hai and Perusahaan Perseroan.
Diversification Opportunities for Hon Hai and Perusahaan Perseroan
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hon and Perusahaan is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Hon Hai Precision and Perusahaan Perseroan PT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perusahaan Perseroan 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 Perusahaan Perseroan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perusahaan Perseroan has no effect on the direction of Hon Hai i.e., Hon Hai and Perusahaan Perseroan go up and down completely randomly.
Pair Corralation between Hon Hai and Perusahaan Perseroan
Assuming the 90 days trading horizon Hon Hai Precision is expected to generate 0.67 times more return on investment than Perusahaan Perseroan. However, Hon Hai Precision is 1.5 times less risky than Perusahaan Perseroan. It trades about -0.01 of its potential returns per unit of risk. Perusahaan Perseroan PT is currently generating about -0.04 per unit of risk. If you would invest 1,170 in Hon Hai Precision on August 30, 2024 and sell it today you would lose (20.00) from holding Hon Hai Precision or give up 1.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hon Hai Precision vs. Perusahaan Perseroan PT
Performance |
| Timeline |
| Hon Hai Precision |
| Perusahaan Perseroan |
Hon Hai and Perusahaan Perseroan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hon Hai and Perusahaan Perseroan
The main advantage of trading using opposite Hon Hai and Perusahaan Perseroan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hon Hai position performs unexpectedly, Perusahaan Perseroan 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 Perusahaan Perseroan will offset losses from the drop in Perusahaan Perseroan's long position.| Hon Hai vs. Singapore Telecommunications Limited | Hon Hai vs. Tsingtao Brewery | Hon Hai vs. BOSTON BEER A | Hon Hai vs. Suntory Beverage Food |
| Perusahaan Perseroan vs. NORWEGIAN AIR SHUT | Perusahaan Perseroan vs. TRADEGATE | Perusahaan Perseroan vs. TRADEDOUBLER AB SK | Perusahaan Perseroan vs. Auto Trader 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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