Correlation Between National Atomic and Hon Hai
Can any of the company-specific risk be diversified away by investing in both National Atomic and Hon Hai 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 National Atomic and Hon Hai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Atomic Co and Hon Hai Precision, you can compare the effects of market volatilities on National Atomic and Hon Hai 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 National Atomic with a short position of Hon Hai. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Atomic and Hon Hai.
Diversification Opportunities for National Atomic and Hon Hai
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between National and Hon is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding National Atomic Co and Hon Hai Precision in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hon Hai Precision and National Atomic 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 National Atomic Co are associated (or correlated) with Hon Hai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hon Hai Precision has no effect on the direction of National Atomic i.e., National Atomic and Hon Hai go up and down completely randomly.
Pair Corralation between National Atomic and Hon Hai
Assuming the 90 days trading horizon National Atomic is expected to generate 16.77 times less return on investment than Hon Hai. But when comparing it to its historical volatility, National Atomic Co is 1.37 times less risky than Hon Hai. It trades about 0.01 of its potential returns per unit of risk. Hon Hai Precision is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,023 in Hon Hai Precision on September 1, 2024 and sell it today you would earn a total of 185.00 from holding Hon Hai Precision or generate 18.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.23% |
| Values | Daily Returns |
National Atomic Co vs. Hon Hai Precision
Performance |
| Timeline |
| National Atomic |
| Hon Hai Precision |
National Atomic and Hon Hai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Atomic and Hon Hai
The main advantage of trading using opposite National Atomic and Hon Hai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Atomic position performs unexpectedly, Hon Hai 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 Hon Hai will offset losses from the drop in Hon Hai's long position.| National Atomic vs. Ashtead Technology Holdings | National Atomic vs. Concurrent Technologies Plc | National Atomic vs. Ross Stores | National Atomic vs. Lendinvest PLC |
| Hon Hai vs. Zanaga Iron Ore | Hon Hai vs. Westlake Chemical Corp | Hon Hai vs. Darden Restaurants | Hon Hai vs. United States Steel |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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