Correlation Between Chunghwa Telecom and E Lead
Can any of the company-specific risk be diversified away by investing in both Chunghwa Telecom and E Lead 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 E Lead 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 E Lead Electronic Co, you can compare the effects of market volatilities on Chunghwa Telecom and E Lead 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 E Lead. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chunghwa Telecom and E Lead.
Diversification Opportunities for Chunghwa Telecom and E Lead
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Chunghwa and 2497 is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Chunghwa Telecom Co and E Lead Electronic Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E Lead Electronic 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 E Lead. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E Lead Electronic has no effect on the direction of Chunghwa Telecom i.e., Chunghwa Telecom and E Lead go up and down completely randomly.
Pair Corralation between Chunghwa Telecom and E Lead
Assuming the 90 days trading horizon Chunghwa Telecom is expected to generate 107.88 times less return on investment than E Lead. But when comparing it to its historical volatility, Chunghwa Telecom Co is 5.44 times less risky than E Lead. It trades about 0.0 of its potential returns per unit of risk. E Lead Electronic Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 6,290 in E Lead Electronic Co on August 28, 2024 and sell it today you would earn a total of 520.00 from holding E Lead Electronic Co or generate 8.27% 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. E Lead Electronic Co
Performance |
| Timeline |
| Chunghwa Telecom |
| E Lead Electronic |
Chunghwa Telecom and E Lead Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chunghwa Telecom and E Lead
The main advantage of trading using opposite Chunghwa Telecom and E Lead positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chunghwa Telecom position performs unexpectedly, E Lead 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 E Lead will offset losses from the drop in E Lead'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 |
| E Lead vs. Taiwan Semiconductor Manufacturing | E Lead vs. Hon Hai Precision | E Lead vs. MediaTek | E Lead 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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