Correlation Between Hon Hai and AudioCodes
Can any of the company-specific risk be diversified away by investing in both Hon Hai and AudioCodes 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 AudioCodes 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 AudioCodes, you can compare the effects of market volatilities on Hon Hai and AudioCodes 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 AudioCodes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hon Hai and AudioCodes.
Diversification Opportunities for Hon Hai and AudioCodes
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hon and AudioCodes is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Hon Hai Precision and AudioCodes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AudioCodes 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 AudioCodes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AudioCodes has no effect on the direction of Hon Hai i.e., Hon Hai and AudioCodes go up and down completely randomly.
Pair Corralation between Hon Hai and AudioCodes
Assuming the 90 days horizon Hon Hai Precision is expected to generate 0.67 times more return on investment than AudioCodes. However, Hon Hai Precision is 1.49 times less risky than AudioCodes. It trades about 0.08 of its potential returns per unit of risk. AudioCodes is currently generating about -0.03 per unit of risk. If you would invest 643.00 in Hon Hai Precision on August 24, 2024 and sell it today you would earn a total of 597.00 from holding Hon Hai Precision or generate 92.85% 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. AudioCodes
Performance |
| Timeline |
| Hon Hai Precision |
| AudioCodes |
Hon Hai and AudioCodes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hon Hai and AudioCodes
The main advantage of trading using opposite Hon Hai and AudioCodes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hon Hai position performs unexpectedly, AudioCodes 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 AudioCodes will offset losses from the drop in AudioCodes' 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 |
| AudioCodes vs. Aviat Networks | AudioCodes vs. Silicom | AudioCodes vs. Akoustis Technologies | AudioCodes vs. Gilat Satellite Networks |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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