Correlation Between Apple and Hon Hai
Can any of the company-specific risk be diversified away by investing in both Apple 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 Apple and Hon Hai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Hon Hai Precision, you can compare the effects of market volatilities on Apple 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 Apple with a short position of Hon Hai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Hon Hai.
Diversification Opportunities for Apple and Hon Hai
Very weak diversification
The 3 months correlation between Apple and Hon is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc 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 Apple 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 Apple Inc 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 Apple i.e., Apple and Hon Hai go up and down completely randomly.
Pair Corralation between Apple and Hon Hai
Assuming the 90 days trading horizon Apple Inc is expected to generate 0.69 times more return on investment than Hon Hai. However, Apple Inc is 1.45 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 0.03 per unit of risk. If you would invest 19,977 in Apple Inc on June 10, 2024 and sell it today you would earn a total of 1,573 from holding Apple Inc or generate 7.87% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Apple Inc vs. Hon Hai Precision
Performance |
Timeline |
Apple Inc |
Hon Hai Precision |
Apple and Hon Hai Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Apple and Hon Hai
The main advantage of trading using opposite Apple and Hon Hai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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.Apple vs. Kaufman Et Broad | Apple vs. Norman Broadbent Plc | Apple vs. Ross Stores | Apple vs. Costco Wholesale Corp |
Hon Hai vs. Erste Group Bank | Hon Hai vs. Bank of Ireland | Hon Hai vs. Cincinnati Financial Corp | Hon Hai vs. XLMedia PLC |
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.
Other Complementary Tools
Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
Share Portfolio Track or share privately all of your investments from the convenience of any device | |
Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
Commodity Directory Find actively traded commodities issued by global exchanges |