Correlation Between Hon Hai and Vicor

Can any of the company-specific risk be diversified away by investing in both Hon Hai and Vicor 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 Vicor 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 Vicor, you can compare the effects of market volatilities on Hon Hai and Vicor 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 Vicor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hon Hai and Vicor.

Diversification Opportunities for Hon Hai and Vicor

0.0

Correlation Coefficient

Hon Hai  Vicor

Pay attention - limited upside

The 3 months correlation between Hon and Vicor is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Hon Hai Precision and Vicor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vicor 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 Vicor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vicor has no effect on the direction of Hon Hai i.e., Hon Hai and Vicor go up and down completely randomly.

Pair Corralation between Hon Hai and Vicor

If you would invest  4,210  in Vicor on September 30, 2024 and sell it today you would earn a total of  778.00  from holding Vicor or generate 18.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Hon Hai Precision  vs.  Vicor

Hon Hai Precision

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hon Hai Precision has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Hon Hai is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Vicor

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vicor are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain fundamental indicators, Vicor reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hon Hai and Vicor

The main advantage of trading using opposite Hon Hai and Vicor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hon Hai position performs unexpectedly, Vicor 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 Vicor will offset losses from the drop in Vicor's long position.

The idea behind Hon Hai Precision and Vicor pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.