Correlation Between Hon Hai and Grand Vision
Can any of the company-specific risk be diversified away by investing in both Hon Hai and Grand Vision 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 Grand Vision 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 Grand Vision Media, you can compare the effects of market volatilities on Hon Hai and Grand Vision 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 Grand Vision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hon Hai and Grand Vision.
Diversification Opportunities for Hon Hai and Grand Vision
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hon and Grand is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Hon Hai Precision and Grand Vision Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grand Vision Media 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 Grand Vision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grand Vision Media has no effect on the direction of Hon Hai i.e., Hon Hai and Grand Vision go up and down completely randomly.
Pair Corralation between Hon Hai and Grand Vision
Assuming the 90 days trading horizon Hon Hai is expected to generate 12.87 times less return on investment than Grand Vision. But when comparing it to its historical volatility, Hon Hai Precision is 17.05 times less risky than Grand Vision. It trades about 0.07 of its potential returns per unit of risk. Grand Vision Media is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 20.00 in Grand Vision Media on September 24, 2024 and sell it today you would earn a total of 78.00 from holding Grand Vision Media or generate 390.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hon Hai Precision vs. Grand Vision Media
Performance |
| Timeline |
| Hon Hai Precision |
| Grand Vision Media |
Hon Hai and Grand Vision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hon Hai and Grand Vision
The main advantage of trading using opposite Hon Hai and Grand Vision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hon Hai position performs unexpectedly, Grand Vision 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 Grand Vision will offset losses from the drop in Grand Vision's long position.The idea behind Hon Hai Precision and Grand Vision Media pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Grand Vision vs. Samsung Electronics Co | Grand Vision vs. Samsung Electronics Co | Grand Vision vs. Toyota Motor Corp | Grand Vision vs. Hon Hai Precision |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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