Correlation Between Hon Hai and Samsung SDI
Can any of the company-specific risk be diversified away by investing in both Hon Hai and Samsung SDI 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 Samsung SDI 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 Samsung SDI Co, you can compare the effects of market volatilities on Hon Hai and Samsung SDI 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 Samsung SDI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hon Hai and Samsung SDI.
Diversification Opportunities for Hon Hai and Samsung SDI
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hon and Samsung is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Hon Hai Precision and Samsung SDI Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung SDI 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 Samsung SDI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung SDI has no effect on the direction of Hon Hai i.e., Hon Hai and Samsung SDI go up and down completely randomly.
Pair Corralation between Hon Hai and Samsung SDI
Assuming the 90 days trading horizon Hon Hai Precision is expected to generate 1.24 times more return on investment than Samsung SDI. However, Hon Hai is 1.24 times more volatile than Samsung SDI Co. It trades about 0.02 of its potential returns per unit of risk. Samsung SDI Co is currently generating about -0.22 per unit of risk. If you would invest 1,000.00 in Hon Hai Precision on October 31, 2024 and sell it today you would earn a total of 10.00 from holding Hon Hai Precision or generate 1.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hon Hai Precision vs. Samsung SDI Co
Performance |
| Timeline |
| Hon Hai Precision |
| Samsung SDI |
Hon Hai and Samsung SDI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hon Hai and Samsung SDI
The main advantage of trading using opposite Hon Hai and Samsung SDI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hon Hai position performs unexpectedly, Samsung SDI 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 Samsung SDI will offset losses from the drop in Samsung SDI's long position.| Hon Hai vs. Cognizant Technology Solutions | Hon Hai vs. American Airlines Group | Hon Hai vs. Aegean Airlines SA | Hon Hai vs. SCOTT TECHNOLOGY |
| Samsung SDI vs. De Grey Mining | Samsung SDI vs. GREENX METALS LTD | Samsung SDI vs. Western Copper and | Samsung SDI vs. INVITATION HOMES DL |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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