Correlation Between Hon Hai and FUNR
Can any of the company-specific risk be diversified away by investing in both Hon Hai and FUNR 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 FUNR 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 FUNR, you can compare the effects of market volatilities on Hon Hai and FUNR 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 FUNR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hon Hai and FUNR.
Diversification Opportunities for Hon Hai and FUNR
Very good diversification
The 3 months correlation between Hon and FUNR is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Hon Hai Precision and FUNR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FUNR 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 FUNR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FUNR has no effect on the direction of Hon Hai i.e., Hon Hai and FUNR go up and down completely randomly.
Pair Corralation between Hon Hai and FUNR
Assuming the 90 days horizon Hon Hai Precision is expected to under-perform the FUNR. But the pink sheet apears to be less risky and, when comparing its historical volatility, Hon Hai Precision is 37.34 times less risky than FUNR. The pink sheet trades about -0.2 of its potential returns per unit of risk. The FUNR is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 0.01 in FUNR on August 29, 2024 and sell it today you would earn a total of 0.00 from holding FUNR or generate 0.0% 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. FUNR
Performance |
| Timeline |
| Hon Hai Precision |
| FUNR |
Hon Hai and FUNR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hon Hai and FUNR
The main advantage of trading using opposite Hon Hai and FUNR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hon Hai position performs unexpectedly, FUNR 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 FUNR will offset losses from the drop in FUNR's long position.The idea behind Hon Hai Precision and FUNR 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.| FUNR vs. Green Planet Bio | FUNR vs. Azure Holding Group | FUNR vs. Four Leaf Acquisition | FUNR vs. Opus Magnum Ameris |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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