Correlation Between FLOW TRADERS and Hon Hai
Can any of the company-specific risk be diversified away by investing in both FLOW TRADERS 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 FLOW TRADERS and Hon Hai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FLOW TRADERS LTD and Hon Hai Precision, you can compare the effects of market volatilities on FLOW TRADERS 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 FLOW TRADERS with a short position of Hon Hai. Check out your portfolio center. Please also check ongoing floating volatility patterns of FLOW TRADERS and Hon Hai.
Diversification Opportunities for FLOW TRADERS and Hon Hai
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between FLOW and Hon is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding FLOW TRADERS LTD 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 FLOW TRADERS 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 FLOW TRADERS LTD 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 FLOW TRADERS i.e., FLOW TRADERS and Hon Hai go up and down completely randomly.
Pair Corralation between FLOW TRADERS and Hon Hai
Assuming the 90 days horizon FLOW TRADERS LTD is expected to generate 0.54 times more return on investment than Hon Hai. However, FLOW TRADERS LTD is 1.86 times less risky than Hon Hai. It trades about 0.13 of its potential returns per unit of risk. Hon Hai Precision is currently generating about -0.24 per unit of risk. If you would invest 2,046 in FLOW TRADERS LTD on September 3, 2024 and sell it today you would earn a total of 66.00 from holding FLOW TRADERS LTD or generate 3.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
FLOW TRADERS LTD vs. Hon Hai Precision
Performance |
| Timeline |
| FLOW TRADERS LTD |
| Hon Hai Precision |
FLOW TRADERS and Hon Hai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FLOW TRADERS and Hon Hai
The main advantage of trading using opposite FLOW TRADERS and Hon Hai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FLOW TRADERS 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.| FLOW TRADERS vs. Morgan Stanley | FLOW TRADERS vs. The Goldman Sachs | FLOW TRADERS vs. The Goldman Sachs | FLOW TRADERS vs. Superior Plus Corp |
| Hon Hai vs. Astral Foods Limited | Hon Hai vs. Food Life Companies | Hon Hai vs. ORMAT TECHNOLOGIES | Hon Hai vs. SENECA FOODS A |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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