Correlation Between Hon Hai and National Atomic
Can any of the company-specific risk be diversified away by investing in both Hon Hai and National Atomic 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 National Atomic 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 National Atomic Co, you can compare the effects of market volatilities on Hon Hai and National Atomic 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 National Atomic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hon Hai and National Atomic.
Diversification Opportunities for Hon Hai and National Atomic
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hon and National is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Hon Hai Precision and National Atomic Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Atomic 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 National Atomic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Atomic has no effect on the direction of Hon Hai i.e., Hon Hai and National Atomic go up and down completely randomly.
Pair Corralation between Hon Hai and National Atomic
Assuming the 90 days trading horizon Hon Hai Precision is expected to generate 1.37 times more return on investment than National Atomic. However, Hon Hai is 1.37 times more volatile than National Atomic Co. It trades about 0.06 of its potential returns per unit of risk. National Atomic Co is currently generating about 0.01 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 Together |
| Strength | Significant |
| Accuracy | 99.23% |
| Values | Daily Returns |
Hon Hai Precision vs. National Atomic Co
Performance |
| Timeline |
| Hon Hai Precision |
| National Atomic |
Hon Hai and National Atomic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hon Hai and National Atomic
The main advantage of trading using opposite Hon Hai and National Atomic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hon Hai position performs unexpectedly, National Atomic 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 National Atomic will offset losses from the drop in National Atomic'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 |
| National Atomic vs. Ashtead Technology Holdings | National Atomic vs. Concurrent Technologies Plc | National Atomic vs. Ross Stores | National Atomic vs. Lendinvest 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 CEOs Directory module to screen CEOs from public companies around the world.
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