Correlation Between Chunghwa Telecom and Hotel Holiday
Can any of the company-specific risk be diversified away by investing in both Chunghwa Telecom and Hotel Holiday 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 Hotel Holiday 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 Hotel Holiday Garden, you can compare the effects of market volatilities on Chunghwa Telecom and Hotel Holiday 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 Hotel Holiday. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chunghwa Telecom and Hotel Holiday.
Diversification Opportunities for Chunghwa Telecom and Hotel Holiday
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Chunghwa and Hotel is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Chunghwa Telecom Co and Hotel Holiday Garden in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotel Holiday Garden 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 Hotel Holiday. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotel Holiday Garden has no effect on the direction of Chunghwa Telecom i.e., Chunghwa Telecom and Hotel Holiday go up and down completely randomly.
Pair Corralation between Chunghwa Telecom and Hotel Holiday
Assuming the 90 days trading horizon Chunghwa Telecom Co is expected to generate 0.57 times more return on investment than Hotel Holiday. However, Chunghwa Telecom Co is 1.74 times less risky than Hotel Holiday. It trades about 0.02 of its potential returns per unit of risk. Hotel Holiday Garden is currently generating about -0.06 per unit of risk. If you would invest 12,050 in Chunghwa Telecom Co on August 27, 2024 and sell it today you would earn a total of 250.00 from holding Chunghwa Telecom Co or generate 2.07% 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. Hotel Holiday Garden
Performance |
| Timeline |
| Chunghwa Telecom |
| Hotel Holiday Garden |
Chunghwa Telecom and Hotel Holiday Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chunghwa Telecom and Hotel Holiday
The main advantage of trading using opposite Chunghwa Telecom and Hotel Holiday positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chunghwa Telecom position performs unexpectedly, Hotel Holiday 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 Hotel Holiday will offset losses from the drop in Hotel Holiday's long position.| Chunghwa Telecom vs. CTBC Financial Holding | Chunghwa Telecom vs. Fubon Financial Holding | Chunghwa Telecom vs. President Chain Store |
| Hotel Holiday vs. Taiwan Semiconductor Manufacturing | Hotel Holiday vs. Hon Hai Precision | Hotel Holiday vs. MediaTek | Hotel Holiday 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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