Correlation Between Hon Hai and Abingdon Health
Can any of the company-specific risk be diversified away by investing in both Hon Hai and Abingdon Health 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 Abingdon Health 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 Abingdon Health Plc, you can compare the effects of market volatilities on Hon Hai and Abingdon Health 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 Abingdon Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hon Hai and Abingdon Health.
Diversification Opportunities for Hon Hai and Abingdon Health
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hon and Abingdon is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Hon Hai Precision and Abingdon Health Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abingdon Health Plc 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 Abingdon Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abingdon Health Plc has no effect on the direction of Hon Hai i.e., Hon Hai and Abingdon Health go up and down completely randomly.
Pair Corralation between Hon Hai and Abingdon Health
Assuming the 90 days trading horizon Hon Hai Precision is expected to generate 1.15 times more return on investment than Abingdon Health. However, Hon Hai is 1.15 times more volatile than Abingdon Health Plc. It trades about 0.06 of its potential returns per unit of risk. Abingdon Health Plc is currently generating about -0.14 per unit of risk. If you would invest 1,023 in Hon Hai Precision on September 1, 2024 and sell it today you would earn a total of 185.00 from holding Hon Hai Precision or generate 18.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.23% |
| Values | Daily Returns |
Hon Hai Precision vs. Abingdon Health Plc
Performance |
| Timeline |
| Hon Hai Precision |
| Abingdon Health Plc |
Hon Hai and Abingdon Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hon Hai and Abingdon Health
The main advantage of trading using opposite Hon Hai and Abingdon Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hon Hai position performs unexpectedly, Abingdon Health 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 Abingdon Health will offset losses from the drop in Abingdon Health's long position.| Hon Hai vs. Zanaga Iron Ore | Hon Hai vs. Westlake Chemical Corp | Hon Hai vs. Darden Restaurants | Hon Hai vs. United States Steel |
| Abingdon Health vs. Samsung Electronics Co | Abingdon Health vs. Samsung Electronics Co | Abingdon Health vs. Hyundai Motor | Abingdon Health vs. Toyota Motor Corp |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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