Correlation Between Hon Hai and Geo Energy
Can any of the company-specific risk be diversified away by investing in both Hon Hai and Geo Energy 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 Geo Energy 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 Geo Energy Resources, you can compare the effects of market volatilities on Hon Hai and Geo Energy 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 Geo Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hon Hai and Geo Energy.
Diversification Opportunities for Hon Hai and Geo Energy
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hon and Geo is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Hon Hai Precision and Geo Energy Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geo Energy Resources 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 Geo Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Geo Energy Resources has no effect on the direction of Hon Hai i.e., Hon Hai and Geo Energy go up and down completely randomly.
Pair Corralation between Hon Hai and Geo Energy
Assuming the 90 days horizon Hon Hai Precision is expected to generate 0.95 times more return on investment than Geo Energy. However, Hon Hai Precision is 1.05 times less risky than Geo Energy. It trades about 0.3 of its potential returns per unit of risk. Geo Energy Resources is currently generating about -0.22 per unit of risk. If you would invest 1,185 in Hon Hai Precision on July 30, 2024 and sell it today you would earn a total of 140.00 from holding Hon Hai Precision or generate 11.81% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Hon Hai Precision vs. Geo Energy Resources
Performance |
Timeline |
Hon Hai Precision |
Geo Energy Resources |
Hon Hai and Geo Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hon Hai and Geo Energy
The main advantage of trading using opposite Hon Hai and Geo Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hon Hai position performs unexpectedly, Geo Energy 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 Geo Energy will offset losses from the drop in Geo Energy's long position.Hon Hai vs. alpha En | Hon Hai vs. Benchmark Electronics | Hon Hai vs. Bel Fuse A | Hon Hai vs. Methode Electronics |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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