Correlation Between Chunghwa Telecom and StShine Optical
Can any of the company-specific risk be diversified away by investing in both Chunghwa Telecom and StShine Optical 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 StShine Optical 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 StShine Optical Co, you can compare the effects of market volatilities on Chunghwa Telecom and StShine Optical 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 StShine Optical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chunghwa Telecom and StShine Optical.
Diversification Opportunities for Chunghwa Telecom and StShine Optical
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chunghwa and StShine is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Chunghwa Telecom Co and StShine Optical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on StShine Optical 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 StShine Optical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of StShine Optical has no effect on the direction of Chunghwa Telecom i.e., Chunghwa Telecom and StShine Optical go up and down completely randomly.
Pair Corralation between Chunghwa Telecom and StShine Optical
Assuming the 90 days trading horizon Chunghwa Telecom is expected to generate 8.52 times less return on investment than StShine Optical. But when comparing it to its historical volatility, Chunghwa Telecom Co is 2.23 times less risky than StShine Optical. It trades about 0.02 of its potential returns per unit of risk. StShine Optical Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 19,133 in StShine Optical Co on September 1, 2024 and sell it today you would earn a total of 3,267 from holding StShine Optical Co or generate 17.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.47% |
| Values | Daily Returns |
Chunghwa Telecom Co vs. StShine Optical Co
Performance |
| Timeline |
| Chunghwa Telecom |
| StShine Optical |
Chunghwa Telecom and StShine Optical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chunghwa Telecom and StShine Optical
The main advantage of trading using opposite Chunghwa Telecom and StShine Optical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chunghwa Telecom position performs unexpectedly, StShine Optical 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 StShine Optical will offset losses from the drop in StShine Optical'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 |
| StShine Optical vs. Emerging Display Technologies | StShine Optical vs. Far EasTone Telecommunications | StShine Optical vs. Century Iron And | StShine Optical vs. TMP Steel |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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