Correlation Between Hon Hai and Amphenol
Can any of the company-specific risk be diversified away by investing in both Hon Hai and Amphenol 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 Amphenol 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 Amphenol, you can compare the effects of market volatilities on Hon Hai and Amphenol 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 Amphenol. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hon Hai and Amphenol.
Diversification Opportunities for Hon Hai and Amphenol
Very poor diversification
The 3 months correlation between Hon and Amphenol is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Hon Hai Precision and Amphenol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amphenol 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 Amphenol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amphenol has no effect on the direction of Hon Hai i.e., Hon Hai and Amphenol go up and down completely randomly.
Pair Corralation between Hon Hai and Amphenol
Assuming the 90 days trading horizon Hon Hai Precision is expected to under-perform the Amphenol. In addition to that, Hon Hai is 1.69 times more volatile than Amphenol. It trades about -0.06 of its total potential returns per unit of risk. Amphenol is currently generating about 0.24 per unit of volatility. If you would invest 6,378 in Amphenol on August 29, 2024 and sell it today you would earn a total of 652.00 from holding Amphenol or generate 10.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hon Hai Precision vs. Amphenol
Performance |
| Timeline |
| Hon Hai Precision |
| Amphenol |
Hon Hai and Amphenol Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hon Hai and Amphenol
The main advantage of trading using opposite Hon Hai and Amphenol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hon Hai position performs unexpectedly, Amphenol 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 Amphenol will offset losses from the drop in Amphenol'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 |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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