Correlation Between Chunghwa Telecom and Eclat Textile
Can any of the company-specific risk be diversified away by investing in both Chunghwa Telecom and Eclat Textile 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 Chunghwa Telecom and Eclat Textile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chunghwa Telecom Co and Eclat Textile Co, you can compare the effects of market volatilities on Chunghwa Telecom and Eclat Textile 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 Chunghwa Telecom with a short position of Eclat Textile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chunghwa Telecom and Eclat Textile.
Diversification Opportunities for Chunghwa Telecom and Eclat Textile
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Chunghwa and Eclat is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Chunghwa Telecom Co and Eclat Textile Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eclat Textile and Chunghwa Telecom 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 Chunghwa Telecom Co are associated (or correlated) with Eclat Textile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eclat Textile has no effect on the direction of Chunghwa Telecom i.e., Chunghwa Telecom and Eclat Textile go up and down completely randomly.
Pair Corralation between Chunghwa Telecom and Eclat Textile
Assuming the 90 days trading horizon Chunghwa Telecom is expected to generate 1.8 times less return on investment than Eclat Textile. But when comparing it to its historical volatility, Chunghwa Telecom Co is 5.38 times less risky than Eclat Textile. It trades about 0.13 of its potential returns per unit of risk. Eclat Textile Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 54,300 in Eclat Textile Co on August 29, 2024 and sell it today you would earn a total of 900.00 from holding Eclat Textile Co or generate 1.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chunghwa Telecom Co vs. Eclat Textile Co
Performance |
| Timeline |
| Chunghwa Telecom |
| Eclat Textile |
Chunghwa Telecom and Eclat Textile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chunghwa Telecom and Eclat Textile
The main advantage of trading using opposite Chunghwa Telecom and Eclat Textile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chunghwa Telecom position performs unexpectedly, Eclat Textile 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 Eclat Textile will offset losses from the drop in Eclat Textile's long position.| Chunghwa Telecom vs. Taiwan Mobile Co | Chunghwa Telecom vs. China Steel Corp | Chunghwa Telecom vs. Formosa Plastics Corp | Chunghwa Telecom vs. Cathay Financial Holding |
| Eclat Textile vs. Taiwan Semiconductor Manufacturing | Eclat Textile vs. Hon Hai Precision | Eclat Textile vs. MediaTek | Eclat Textile vs. Chunghwa Telecom Co |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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