Correlation Between Aeorema Communications and Hon Hai
Can any of the company-specific risk be diversified away by investing in both Aeorema Communications 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 Aeorema Communications and Hon Hai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aeorema Communications Plc and Hon Hai Precision, you can compare the effects of market volatilities on Aeorema Communications 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 Aeorema Communications with a short position of Hon Hai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aeorema Communications and Hon Hai.
Diversification Opportunities for Aeorema Communications and Hon Hai
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Aeorema and Hon is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Aeorema Communications Plc 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 Aeorema Communications 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 Aeorema Communications Plc 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 Aeorema Communications i.e., Aeorema Communications and Hon Hai go up and down completely randomly.
Pair Corralation between Aeorema Communications and Hon Hai
Assuming the 90 days trading horizon Aeorema Communications Plc is expected to generate 0.68 times more return on investment than Hon Hai. However, Aeorema Communications Plc is 1.48 times less risky than Hon Hai. It trades about 0.21 of its potential returns per unit of risk. Hon Hai Precision is currently generating about 0.04 per unit of risk. If you would invest 5,231 in Aeorema Communications Plc on August 26, 2025 and sell it today you would earn a total of 1,319 from holding Aeorema Communications Plc or generate 25.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aeorema Communications Plc vs. Hon Hai Precision
Performance |
| Timeline |
| Aeorema Communications |
| Hon Hai Precision |
Aeorema Communications and Hon Hai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aeorema Communications and Hon Hai
The main advantage of trading using opposite Aeorema Communications and Hon Hai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aeorema Communications 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.| Aeorema Communications vs. Toyota Motor Corp | Aeorema Communications vs. Samsung Electronics Co | Aeorema Communications vs. Samsung Electronics Co | Aeorema Communications vs. Samsung Electronics Co |
| Hon Hai vs. Fortuna Silver Mines | Hon Hai vs. Software Circle plc | Hon Hai vs. DXC Technology Co | Hon Hai vs. Griffin Mining |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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