Correlation Between Murata Manufacturing and Hon Hai
Can any of the company-specific risk be diversified away by investing in both Murata Manufacturing 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 Murata Manufacturing and Hon Hai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Murata Manufacturing Co and Hon Hai Precision, you can compare the effects of market volatilities on Murata Manufacturing 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 Murata Manufacturing with a short position of Hon Hai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Murata Manufacturing and Hon Hai.
Diversification Opportunities for Murata Manufacturing and Hon Hai
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Murata and Hon is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Murata Manufacturing 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 Murata Manufacturing 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 Murata Manufacturing 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 Murata Manufacturing i.e., Murata Manufacturing and Hon Hai go up and down completely randomly.
Pair Corralation between Murata Manufacturing and Hon Hai
Assuming the 90 days horizon Murata Manufacturing Co is expected to generate 9.57 times more return on investment than Hon Hai. However, Murata Manufacturing is 9.57 times more volatile than Hon Hai Precision. It trades about 0.06 of its potential returns per unit of risk. Hon Hai Precision is currently generating about 0.09 per unit of risk. If you would invest 1,796 in Murata Manufacturing Co on August 27, 2024 and sell it today you would earn a total of 3.00 from holding Murata Manufacturing Co or generate 0.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.93% |
| Values | Daily Returns |
Murata Manufacturing Co vs. Hon Hai Precision
Performance |
| Timeline |
| Murata Manufacturing |
| Hon Hai Precision |
Murata Manufacturing and Hon Hai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Murata Manufacturing and Hon Hai
The main advantage of trading using opposite Murata Manufacturing and Hon Hai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Murata Manufacturing 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.| Murata Manufacturing vs. OMRON Corp ADR | Murata Manufacturing vs. LGL Group | Murata Manufacturing vs. Data IO | Murata Manufacturing vs. Sanmina |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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