Correlation Between Hon Hai and Greenlite Ventures
Can any of the company-specific risk be diversified away by investing in both Hon Hai and Greenlite Ventures 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 Greenlite Ventures 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 Greenlite Ventures, you can compare the effects of market volatilities on Hon Hai and Greenlite Ventures 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 Greenlite Ventures. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hon Hai and Greenlite Ventures.
Diversification Opportunities for Hon Hai and Greenlite Ventures
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hon and Greenlite is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Hon Hai Precision and Greenlite Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenlite Ventures 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 Greenlite Ventures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenlite Ventures has no effect on the direction of Hon Hai i.e., Hon Hai and Greenlite Ventures go up and down completely randomly.
Pair Corralation between Hon Hai and Greenlite Ventures
Assuming the 90 days horizon Hon Hai is expected to generate 4.27 times less return on investment than Greenlite Ventures. But when comparing it to its historical volatility, Hon Hai Precision is 5.37 times less risky than Greenlite Ventures. It trades about 0.08 of its potential returns per unit of risk. Greenlite Ventures is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 27.00 in Greenlite Ventures on September 3, 2024 and sell it today you would earn a total of 40.00 from holding Greenlite Ventures or generate 148.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hon Hai Precision vs. Greenlite Ventures
Performance |
| Timeline |
| Hon Hai Precision |
| Greenlite Ventures |
Hon Hai and Greenlite Ventures Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hon Hai and Greenlite Ventures
The main advantage of trading using opposite Hon Hai and Greenlite Ventures positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hon Hai position performs unexpectedly, Greenlite Ventures 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 Greenlite Ventures will offset losses from the drop in Greenlite Ventures' 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 |
| Greenlite Ventures vs. Huaizhong Health Group | Greenlite Ventures vs. Trimax Corp | Greenlite Ventures vs. Church Crawford | Greenlite Ventures vs. Atlantic Energy Solutions |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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