Correlation Between Chunghwa Telecom and United Microelectronics
Can any of the company-specific risk be diversified away by investing in both Chunghwa Telecom and United Microelectronics 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 United Microelectronics 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 United Microelectronics, you can compare the effects of market volatilities on Chunghwa Telecom and United Microelectronics 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 United Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chunghwa Telecom and United Microelectronics.
Diversification Opportunities for Chunghwa Telecom and United Microelectronics
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Chunghwa and United is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Chunghwa Telecom Co and United Microelectronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Microelectronics 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 United Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Microelectronics has no effect on the direction of Chunghwa Telecom i.e., Chunghwa Telecom and United Microelectronics go up and down completely randomly.
Pair Corralation between Chunghwa Telecom and United Microelectronics
Assuming the 90 days trading horizon Chunghwa Telecom Co is expected to generate 0.35 times more return on investment than United Microelectronics. However, Chunghwa Telecom Co is 2.85 times less risky than United Microelectronics. It trades about 0.08 of its potential returns per unit of risk. United Microelectronics is currently generating about -0.3 per unit of risk. If you would invest 12,250 in Chunghwa Telecom Co on August 30, 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 |
Chunghwa Telecom Co vs. United Microelectronics
Performance |
| Timeline |
| Chunghwa Telecom |
| United Microelectronics |
Chunghwa Telecom and United Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chunghwa Telecom and United Microelectronics
The main advantage of trading using opposite Chunghwa Telecom and United Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chunghwa Telecom position performs unexpectedly, United Microelectronics 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 United Microelectronics will offset losses from the drop in United Microelectronics' 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 |
| United Microelectronics vs. Sitronix Technology Corp | United Microelectronics vs. Elan Microelectronics Corp |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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