Correlation Between Hon Hai and Mccoy Global

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

Diversification Opportunities for Hon Hai and Mccoy Global

-0.72

Correlation Coefficient

Hon Hai  Mccoy Global

Pay attention - limited upside

The 3 months correlation between Hon and Mccoy is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Hon Hai Precision and Mccoy Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mccoy Global 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 Mccoy Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mccoy Global has no effect on the direction of Hon Hai i.e., Hon Hai and Mccoy Global go up and down completely randomly.

Pair Corralation between Hon Hai and Mccoy Global

Assuming the 90 days horizon Hon Hai Precision is expected to generate 1.05 times more return on investment than Mccoy Global. However, Hon Hai is 1.05 times more volatile than Mccoy Global. It trades about 0.3 of its potential returns per unit of risk. Mccoy Global is currently generating about -0.06 per unit of risk. If you would invest  648.00  in Hon Hai Precision on February 18, 2024 and sell it today you would earn a total of  406.00  from holding Hon Hai Precision or generate 62.65% return on investment over 90 days.

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

Hon Hai Precision  vs.  Mccoy Global

Hon Hai Precision

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hon Hai Precision are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Hon Hai reported solid returns over the last few months and may actually be approaching a breakup point.

Mccoy Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mccoy Global has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Hon Hai and Mccoy Global

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

The idea behind Hon Hai Precision and Mccoy Global 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.