Correlation Between Hon Hai and GSK Plc
Can any of the company-specific risk be diversified away by investing in both Hon Hai and GSK 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 GSK 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 GSK plc, you can compare the effects of market volatilities on Hon Hai and GSK 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 GSK Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hon Hai and GSK Plc.
Diversification Opportunities for Hon Hai and GSK Plc
Pay attention - limited upside
The 3 months correlation between Hon and GSK is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Hon Hai Precision and GSK plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GSK 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 GSK Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GSK plc has no effect on the direction of Hon Hai i.e., Hon Hai and GSK Plc go up and down completely randomly.
Pair Corralation between Hon Hai and GSK Plc
If you would invest (100.00) in GSK plc on August 24, 2024 and sell it today you would earn a total of 100.00 from holding GSK plc or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Hon Hai Precision vs. GSK plc
Performance |
| Timeline |
| Hon Hai Precision |
| GSK plc |
Hon Hai and GSK Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hon Hai and GSK Plc
The main advantage of trading using opposite Hon Hai and GSK Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hon Hai position performs unexpectedly, GSK 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 GSK Plc will offset losses from the drop in GSK Plc's 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 |
| GSK Plc vs. Santen Pharmaceutical Co | GSK Plc vs. Grifols SA ADR | GSK Plc vs. Pfizer Inc | GSK Plc vs. Sanofi ADR |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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