Correlation Between Hon Hai and Auckland International
Can any of the company-specific risk be diversified away by investing in both Hon Hai and Auckland International 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 Auckland International 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 Auckland International Airport, you can compare the effects of market volatilities on Hon Hai and Auckland International 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 Auckland International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hon Hai and Auckland International.
Diversification Opportunities for Hon Hai and Auckland International
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hon and Auckland is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Hon Hai Precision and Auckland International Airport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auckland International 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 Auckland International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auckland International has no effect on the direction of Hon Hai i.e., Hon Hai and Auckland International go up and down completely randomly.
Pair Corralation between Hon Hai and Auckland International
Assuming the 90 days horizon Hon Hai Precision is expected to under-perform the Auckland International. But the pink sheet apears to be less risky and, when comparing its historical volatility, Hon Hai Precision is 1.69 times less risky than Auckland International. The pink sheet trades about -0.2 of its potential returns per unit of risk. The Auckland International Airport is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 2,171 in Auckland International Airport on August 29, 2024 and sell it today you would lose (60.00) from holding Auckland International Airport or give up 2.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hon Hai Precision vs. Auckland International Airport
Performance |
| Timeline |
| Hon Hai Precision |
| Auckland International |
Hon Hai and Auckland International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hon Hai and Auckland International
The main advantage of trading using opposite Hon Hai and Auckland International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hon Hai position performs unexpectedly, Auckland International 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 Auckland International will offset losses from the drop in Auckland International's long position.The idea behind Hon Hai Precision and Auckland International Airport pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Auckland International vs. Aeroports de Paris | Auckland International vs. Aena SME SA | Auckland International vs. Aena SME SA | Auckland International vs. Airports of Thailand |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |