Correlation Between Hon Hai and Aeroports
Can any of the company-specific risk be diversified away by investing in both Hon Hai and Aeroports 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 Aeroports 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 Aeroports de Paris, you can compare the effects of market volatilities on Hon Hai and Aeroports 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 Aeroports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hon Hai and Aeroports.
Diversification Opportunities for Hon Hai and Aeroports
Pay attention - limited upside
The 3 months correlation between Hon and Aeroports is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Hon Hai Precision and Aeroports de Paris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeroports de Paris 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 Aeroports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeroports de Paris has no effect on the direction of Hon Hai i.e., Hon Hai and Aeroports go up and down completely randomly.
Pair Corralation between Hon Hai and Aeroports
Assuming the 90 days horizon Hon Hai Precision is expected to generate 1.09 times more return on investment than Aeroports. However, Hon Hai is 1.09 times more volatile than Aeroports de Paris. It trades about 0.11 of its potential returns per unit of risk. Aeroports de Paris is currently generating about 0.03 per unit of risk. If you would invest 631.00 in Hon Hai Precision on August 25, 2024 and sell it today you would earn a total of 609.00 from holding Hon Hai Precision or generate 96.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 60.34% |
| Values | Daily Returns |
Hon Hai Precision vs. Aeroports de Paris
Performance |
| Timeline |
| Hon Hai Precision |
| Aeroports de Paris |
Hon Hai and Aeroports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hon Hai and Aeroports
The main advantage of trading using opposite Hon Hai and Aeroports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hon Hai position performs unexpectedly, Aeroports 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 Aeroports will offset losses from the drop in Aeroports' long position.| Hon Hai vs. AT S Austria | Hon Hai vs. alpha En | Hon Hai vs. Alps Electric Co | Hon Hai vs. Bitmine Immersion Technologies |
| Aeroports vs. Japan Airport Terminal | Aeroports vs. Aena SME SA | Aeroports vs. Airports of Thailand | Aeroports vs. Aena SME SA |
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 Stocks Directory module to find actively traded stocks across global markets.
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