Correlation Between Hon Hai and Fortive

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

Diversification Opportunities for Hon Hai and Fortive

-0.37

Correlation Coefficient

Hon Hai  Fortive

Very good diversification

The 3 months correlation between Hon and Fortive is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Hon Hai Precision and Fortive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortive 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 Fortive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortive has no effect on the direction of Hon Hai i.e., Hon Hai and Fortive go up and down completely randomly.

Pair Corralation between Hon Hai and Fortive

Assuming the 90 days trading horizon Hon Hai Precision is expected to generate 1.17 times more return on investment than Fortive. However, Hon Hai is 1.17 times more volatile than Fortive. It trades about 0.16 of its potential returns per unit of risk. Fortive is currently generating about -0.08 per unit of risk. If you would invest  654.00  in Hon Hai Precision on April 22, 2025 and sell it today you would earn a total of  291.00  from holding Hon Hai Precision or generate 44.5% 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.  Fortive

Hon Hai Precision

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hon Hai Precision are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Hon Hai reported solid returns over the last few months and may actually be approaching a breakup point.

Fortive

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fortive has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in August 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Hon Hai and Fortive

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

The idea behind Hon Hai Precision and Fortive 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.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.