Correlation Between Alibaba Group and Hon Hai
Can any of the company-specific risk be diversified away by investing in both Alibaba Group 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 Alibaba Group and Hon Hai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alibaba Group Holding and Hon Hai Precision, you can compare the effects of market volatilities on Alibaba Group 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 Alibaba Group with a short position of Hon Hai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alibaba Group and Hon Hai.
Diversification Opportunities for Alibaba Group and Hon Hai
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Alibaba and Hon is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Alibaba Group Holding 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 Alibaba Group 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 Alibaba Group Holding 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 Alibaba Group i.e., Alibaba Group and Hon Hai go up and down completely randomly.
Pair Corralation between Alibaba Group and Hon Hai
Assuming the 90 days trading horizon Alibaba Group Holding is expected to generate 1.94 times more return on investment than Hon Hai. However, Alibaba Group is 1.94 times more volatile than Hon Hai Precision. It trades about 0.11 of its potential returns per unit of risk. Hon Hai Precision is currently generating about 0.1 per unit of risk. If you would invest 12,054 in Alibaba Group Holding on August 19, 2025 and sell it today you would earn a total of 3,903 from holding Alibaba Group Holding or generate 32.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
Alibaba Group Holding vs. Hon Hai Precision
Performance |
| Timeline |
| Alibaba Group Holding |
| Hon Hai Precision |
Alibaba Group and Hon Hai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alibaba Group and Hon Hai
The main advantage of trading using opposite Alibaba Group and Hon Hai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alibaba Group 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.| Alibaba Group vs. Resolute Mining Limited | Alibaba Group vs. AMG Advanced Metallurgical | Alibaba Group vs. United Internet AG | Alibaba Group vs. Cornish Metals |
| Hon Hai vs. Orient Telecoms | Hon Hai vs. Universal Display Corp | Hon Hai vs. Aeorema Communications Plc | Hon Hai vs. Zegona Communications 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Money Managers Screen money managers from public funds and ETFs managed around the world |