Correlation Between Hon Hai and RBG Holdings
Can any of the company-specific risk be diversified away by investing in both Hon Hai and RBG Holdings 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 RBG Holdings 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 RBG Holdings PLC, you can compare the effects of market volatilities on Hon Hai and RBG Holdings 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 RBG Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hon Hai and RBG Holdings.
Diversification Opportunities for Hon Hai and RBG Holdings
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Hon and RBG is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Hon Hai Precision and RBG Holdings PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBG Holdings 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 RBG Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBG Holdings PLC has no effect on the direction of Hon Hai i.e., Hon Hai and RBG Holdings go up and down completely randomly.
Pair Corralation between Hon Hai and RBG Holdings
Assuming the 90 days trading horizon Hon Hai Precision is expected to generate 0.42 times more return on investment than RBG Holdings. However, Hon Hai Precision is 2.4 times less risky than RBG Holdings. It trades about 0.07 of its potential returns per unit of risk. RBG Holdings PLC is currently generating about -0.09 per unit of risk. If you would invest 597.00 in Hon Hai Precision on September 13, 2024 and sell it today you would earn a total of 563.00 from holding Hon Hai Precision or generate 94.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hon Hai Precision vs. RBG Holdings PLC
Performance |
| Timeline |
| Hon Hai Precision |
| RBG Holdings PLC |
Hon Hai and RBG Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hon Hai and RBG Holdings
The main advantage of trading using opposite Hon Hai and RBG Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hon Hai position performs unexpectedly, RBG Holdings 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 RBG Holdings will offset losses from the drop in RBG Holdings' long position.| Hon Hai vs. Samsung Electronics Co | Hon Hai vs. Samsung Electronics Co | Hon Hai vs. Hyundai Motor | Hon Hai vs. Toyota Motor Corp |
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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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