Correlation Between Kwong Fong and Chunghwa Telecom
Can any of the company-specific risk be diversified away by investing in both Kwong Fong 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 Kwong Fong and Chunghwa Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kwong Fong Industries and Chunghwa Telecom Co, you can compare the effects of market volatilities on Kwong Fong 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 Kwong Fong with a short position of Chunghwa Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kwong Fong and Chunghwa Telecom.
Diversification Opportunities for Kwong Fong and Chunghwa Telecom
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kwong and Chunghwa is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Kwong Fong Industries and Chunghwa Telecom Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chunghwa Telecom and Kwong Fong 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 Kwong Fong Industries 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 Kwong Fong i.e., Kwong Fong and Chunghwa Telecom go up and down completely randomly.
Pair Corralation between Kwong Fong and Chunghwa Telecom
Assuming the 90 days trading horizon Kwong Fong Industries is expected to under-perform the Chunghwa Telecom. In addition to that, Kwong Fong is 3.2 times more volatile than Chunghwa Telecom Co. It trades about -0.13 of its total potential returns per unit of risk. Chunghwa Telecom Co is currently generating about 0.05 per unit of volatility. If you would invest 12,250 in Chunghwa Telecom Co on August 27, 2024 and sell it today you would earn a total of 50.00 from holding Chunghwa Telecom Co or generate 0.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kwong Fong Industries vs. Chunghwa Telecom Co
Performance |
| Timeline |
| Kwong Fong Industries |
| Chunghwa Telecom |
Kwong Fong and Chunghwa Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kwong Fong and Chunghwa Telecom
The main advantage of trading using opposite Kwong Fong and Chunghwa Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kwong Fong 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.| Kwong Fong vs. Taiwan Semiconductor Manufacturing | Kwong Fong vs. Hon Hai Precision | Kwong Fong vs. MediaTek | Kwong Fong vs. Chunghwa Telecom Co |
| 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |