Correlation Between Chunghwa Telecom and AVerMedia Technologies
Can any of the company-specific risk be diversified away by investing in both Chunghwa Telecom and AVerMedia Technologies 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 AVerMedia Technologies 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 AVerMedia Technologies, you can compare the effects of market volatilities on Chunghwa Telecom and AVerMedia Technologies 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 AVerMedia Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chunghwa Telecom and AVerMedia Technologies.
Diversification Opportunities for Chunghwa Telecom and AVerMedia Technologies
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Chunghwa and AVerMedia is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Chunghwa Telecom Co and AVerMedia Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AVerMedia Technologies 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 AVerMedia Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AVerMedia Technologies has no effect on the direction of Chunghwa Telecom i.e., Chunghwa Telecom and AVerMedia Technologies go up and down completely randomly.
Pair Corralation between Chunghwa Telecom and AVerMedia Technologies
Assuming the 90 days trading horizon Chunghwa Telecom is expected to generate 8.6 times less return on investment than AVerMedia Technologies. But when comparing it to its historical volatility, Chunghwa Telecom Co is 6.15 times less risky than AVerMedia Technologies. It trades about 0.09 of its potential returns per unit of risk. AVerMedia Technologies is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 4,015 in AVerMedia Technologies on November 6, 2024 and sell it today you would earn a total of 840.00 from holding AVerMedia Technologies or generate 20.92% 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. AVerMedia Technologies
Performance |
| Timeline |
| Chunghwa Telecom |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
| AVerMedia Technologies |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Chunghwa Telecom and AVerMedia Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chunghwa Telecom and AVerMedia Technologies
The main advantage of trading using opposite Chunghwa Telecom and AVerMedia Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chunghwa Telecom position performs unexpectedly, AVerMedia Technologies 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 AVerMedia Technologies will offset losses from the drop in AVerMedia Technologies' long position.The idea behind Chunghwa Telecom Co and AVerMedia Technologies pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |