Correlation Between Hon Hai and Advanced Medical
Can any of the company-specific risk be diversified away by investing in both Hon Hai and Advanced Medical 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 Advanced Medical 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 Advanced Medical Solutions, you can compare the effects of market volatilities on Hon Hai and Advanced Medical 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 Advanced Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hon Hai and Advanced Medical.
Diversification Opportunities for Hon Hai and Advanced Medical
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hon and Advanced is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Hon Hai Precision and Advanced Medical Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Medical Sol 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 Advanced Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Medical Sol has no effect on the direction of Hon Hai i.e., Hon Hai and Advanced Medical go up and down completely randomly.
Pair Corralation between Hon Hai and Advanced Medical
Assuming the 90 days trading horizon Hon Hai Precision is expected to under-perform the Advanced Medical. But the stock apears to be less risky and, when comparing its historical volatility, Hon Hai Precision is 2.28 times less risky than Advanced Medical. The stock trades about -0.19 of its potential returns per unit of risk. The Advanced Medical Solutions is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 19,180 in Advanced Medical Solutions on August 26, 2024 and sell it today you would earn a total of 1,770 from holding Advanced Medical Solutions or generate 9.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hon Hai Precision vs. Advanced Medical Solutions
Performance |
| Timeline |
| Hon Hai Precision |
| Advanced Medical Sol |
Hon Hai and Advanced Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hon Hai and Advanced Medical
The main advantage of trading using opposite Hon Hai and Advanced Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hon Hai position performs unexpectedly, Advanced Medical 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 Advanced Medical will offset losses from the drop in Advanced Medical's long position.| Hon Hai vs. Catalyst Media Group | Hon Hai vs. CATLIN GROUP | Hon Hai vs. Tamburi Investment Partners | Hon Hai vs. Magnora ASA |
| Advanced Medical vs. Gaming Realms plc | Advanced Medical vs. Playtech Plc | Advanced Medical vs. Hochschild Mining plc | Advanced Medical vs. Aeorema Communications Plc |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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