Correlation Between Hon Hai and AT S

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

Diversification Opportunities for Hon Hai and AT S

0.41

Correlation Coefficient

Hon Hai  AT S

Very weak diversification

The 3 months correlation between Hon and ASAAF is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Hon Hai Precision and AT S Austria in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AT S Austria 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 AT S. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AT S Austria has no effect on the direction of Hon Hai i.e., Hon Hai and AT S go up and down completely randomly.

Pair Corralation between Hon Hai and AT S

Assuming the 90 days horizon Hon Hai Precision is expected to generate 1.03 times more return on investment than AT S. However, Hon Hai is 1.03 times more volatile than AT S Austria. It trades about 0.03 of its potential returns per unit of risk. AT S Austria is currently generating about 0.03 per unit of risk. If you would invest  1,088  in Hon Hai Precision on September 18, 2024 and sell it today you would earn a total of  30.00  from holding Hon Hai Precision or generate 2.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Hon Hai Precision  vs.  AT S Austria

Hon Hai Precision

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hon Hai Precision are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Hon Hai is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

AT S Austria

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AT S Austria are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, AT S is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Hon Hai and AT S

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

The idea behind Hon Hai Precision and AT S Austria 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.

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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.