Correlation Between Chunghwa Telecom and Yang Ming
Can any of the company-specific risk be diversified away by investing in both Chunghwa Telecom and Yang Ming 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 Yang Ming 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 Yang Ming Marine, you can compare the effects of market volatilities on Chunghwa Telecom and Yang Ming 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 Yang Ming. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chunghwa Telecom and Yang Ming.
Diversification Opportunities for Chunghwa Telecom and Yang Ming
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Chunghwa and Yang is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Chunghwa Telecom Co and Yang Ming Marine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yang Ming Marine 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 Yang Ming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yang Ming Marine has no effect on the direction of Chunghwa Telecom i.e., Chunghwa Telecom and Yang Ming go up and down completely randomly.
Pair Corralation between Chunghwa Telecom and Yang Ming
Assuming the 90 days trading horizon Chunghwa Telecom is expected to generate 18.09 times less return on investment than Yang Ming. But when comparing it to its historical volatility, Chunghwa Telecom Co is 4.98 times less risky than Yang Ming. It trades about 0.04 of its potential returns per unit of risk. Yang Ming Marine is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 6,810 in Yang Ming Marine on September 3, 2024 and sell it today you would earn a total of 510.00 from holding Yang Ming Marine or generate 7.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chunghwa Telecom Co vs. Yang Ming Marine
Performance |
| Timeline |
| Chunghwa Telecom |
| Yang Ming Marine |
Chunghwa Telecom and Yang Ming Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chunghwa Telecom and Yang Ming
The main advantage of trading using opposite Chunghwa Telecom and Yang Ming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chunghwa Telecom position performs unexpectedly, Yang Ming 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 Yang Ming will offset losses from the drop in Yang Ming's long position.| Chunghwa Telecom vs. China Steel Corp | Chunghwa Telecom vs. Formosa Plastics Corp | Chunghwa Telecom vs. Cathay Financial Holding | Chunghwa Telecom vs. Fubon Financial Holding |
| Yang Ming vs. Evergreen Marine Corp | Yang Ming vs. Wan Hai Lines | Yang Ming vs. China Airlines | Yang Ming vs. Eva Airways 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
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