Correlation Between Hon Hai and YouGov Plc
Can any of the company-specific risk be diversified away by investing in both Hon Hai and YouGov Plc 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 YouGov Plc 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 YouGov plc, you can compare the effects of market volatilities on Hon Hai and YouGov Plc 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 YouGov Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hon Hai and YouGov Plc.
Diversification Opportunities for Hon Hai and YouGov Plc
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hon and YouGov is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Hon Hai Precision and YouGov plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YouGov 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 YouGov Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YouGov plc has no effect on the direction of Hon Hai i.e., Hon Hai and YouGov Plc go up and down completely randomly.
Pair Corralation between Hon Hai and YouGov Plc
Assuming the 90 days trading horizon Hon Hai Precision is expected to generate 0.58 times more return on investment than YouGov Plc. However, Hon Hai Precision is 1.73 times less risky than YouGov Plc. It trades about 0.08 of its potential returns per unit of risk. YouGov plc is currently generating about -0.02 per unit of risk. If you would invest 608.00 in Hon Hai Precision on August 30, 2024 and sell it today you would earn a total of 596.00 from holding Hon Hai Precision or generate 98.03% 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. YouGov plc
Performance |
| Timeline |
| Hon Hai Precision |
| YouGov plc |
Hon Hai and YouGov Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hon Hai and YouGov Plc
The main advantage of trading using opposite Hon Hai and YouGov Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hon Hai position performs unexpectedly, YouGov Plc 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 YouGov Plc will offset losses from the drop in YouGov Plc's long position.| Hon Hai vs. Zoom Video Communications | Hon Hai vs. Adriatic Metals | Hon Hai vs. Silvercorp Metals | Hon Hai vs. Gear4music Plc |
| YouGov Plc vs. Hollywood Bowl Group | YouGov Plc vs. Direct Line Insurance | YouGov Plc vs. Supermarket Income REIT | YouGov Plc vs. Catalyst Media Group |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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