Correlation Between Sanmina and Hon Hai
Can any of the company-specific risk be diversified away by investing in both Sanmina 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 Sanmina and Hon Hai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sanmina and Hon Hai Precision, you can compare the effects of market volatilities on Sanmina 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 Sanmina with a short position of Hon Hai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sanmina and Hon Hai.
Diversification Opportunities for Sanmina and Hon Hai
Very weak diversification
The 3 months correlation between Sanmina and Hon is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Sanmina 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 Sanmina 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 Sanmina 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 Sanmina i.e., Sanmina and Hon Hai go up and down completely randomly.
Pair Corralation between Sanmina and Hon Hai
Given the investment horizon of 90 days Sanmina is expected to generate 0.85 times more return on investment than Hon Hai. However, Sanmina is 1.18 times less risky than Hon Hai. It trades about 0.07 of its potential returns per unit of risk. Hon Hai Precision is currently generating about 0.05 per unit of risk. If you would invest 6,688 in Sanmina on August 30, 2024 and sell it today you would earn a total of 1,179 from holding Sanmina or generate 17.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sanmina vs. Hon Hai Precision
Performance |
| Timeline |
| Sanmina |
| Hon Hai Precision |
Sanmina and Hon Hai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sanmina and Hon Hai
The main advantage of trading using opposite Sanmina and Hon Hai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sanmina 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.| Sanmina vs. Benchmark Electronics | Sanmina vs. Methode Electronics | Sanmina vs. OSI Systems | Sanmina vs. Celestica |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities |