Correlation Between Chunghwa Telecom and MediaTek
Can any of the company-specific risk be diversified away by investing in both Chunghwa Telecom and MediaTek 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 MediaTek 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 MediaTek, you can compare the effects of market volatilities on Chunghwa Telecom and MediaTek 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 MediaTek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chunghwa Telecom and MediaTek.
Diversification Opportunities for Chunghwa Telecom and MediaTek
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chunghwa and MediaTek is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Chunghwa Telecom Co and MediaTek in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MediaTek 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 MediaTek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MediaTek has no effect on the direction of Chunghwa Telecom i.e., Chunghwa Telecom and MediaTek go up and down completely randomly.
Pair Corralation between Chunghwa Telecom and MediaTek
Assuming the 90 days trading horizon Chunghwa Telecom is expected to generate 7.05 times less return on investment than MediaTek. But when comparing it to its historical volatility, Chunghwa Telecom Co is 3.55 times less risky than MediaTek. It trades about 0.03 of its potential returns per unit of risk. MediaTek is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 73,900 in MediaTek on August 24, 2024 and sell it today you would earn a total of 57,100 from holding MediaTek or generate 77.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chunghwa Telecom Co vs. MediaTek
Performance |
| Timeline |
| Chunghwa Telecom |
| MediaTek |
Chunghwa Telecom and MediaTek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chunghwa Telecom and MediaTek
The main advantage of trading using opposite Chunghwa Telecom and MediaTek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chunghwa Telecom position performs unexpectedly, MediaTek 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 MediaTek will offset losses from the drop in MediaTek'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 |
| MediaTek vs. Novatek Microelectronics Corp | MediaTek vs. Quanta Computer | MediaTek vs. United Microelectronics |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Global Correlations Find global opportunities by holding instruments from different markets |