Correlation Between Nan Ya and Chunghwa Telecom
Can any of the company-specific risk be diversified away by investing in both Nan Ya and Chunghwa Telecom 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 Nan Ya and Chunghwa Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nan Ya Plastics and Chunghwa Telecom Co, you can compare the effects of market volatilities on Nan Ya and Chunghwa Telecom 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 Nan Ya with a short position of Chunghwa Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nan Ya and Chunghwa Telecom.
Diversification Opportunities for Nan Ya and Chunghwa Telecom
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nan and Chunghwa is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Nan Ya Plastics and Chunghwa Telecom Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chunghwa Telecom and Nan Ya 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 Nan Ya Plastics are associated (or correlated) with Chunghwa Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chunghwa Telecom has no effect on the direction of Nan Ya i.e., Nan Ya and Chunghwa Telecom go up and down completely randomly.
Pair Corralation between Nan Ya and Chunghwa Telecom
Assuming the 90 days trading horizon Nan Ya Plastics is expected to under-perform the Chunghwa Telecom. In addition to that, Nan Ya is 4.08 times more volatile than Chunghwa Telecom Co. It trades about -0.08 of its total potential returns per unit of risk. Chunghwa Telecom Co is currently generating about 0.09 per unit of volatility. If you would invest 12,200 in Chunghwa Telecom Co on August 26, 2024 and sell it today you would earn a total of 100.00 from holding Chunghwa Telecom Co or generate 0.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nan Ya Plastics vs. Chunghwa Telecom Co
Performance |
| Timeline |
| Nan Ya Plastics |
| Chunghwa Telecom |
Nan Ya and Chunghwa Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nan Ya and Chunghwa Telecom
The main advantage of trading using opposite Nan Ya and Chunghwa Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nan Ya position performs unexpectedly, Chunghwa Telecom 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 Chunghwa Telecom will offset losses from the drop in Chunghwa Telecom's long position.| Nan Ya vs. Formosa Plastics Corp | Nan Ya vs. Formosa Chemicals Fibre | Nan Ya vs. China Steel Corp | Nan Ya vs. Formosa Petrochemical Corp |
| Chunghwa Telecom vs. CTBC Financial Holding | Chunghwa Telecom vs. Fubon Financial Holding | Chunghwa Telecom vs. President Chain Store |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |