Correlation Between Chunghwa Telecom and Formosa International
Can any of the company-specific risk be diversified away by investing in both Chunghwa Telecom and Formosa International 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 Formosa International 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 Formosa International Hotels, you can compare the effects of market volatilities on Chunghwa Telecom and Formosa International 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 Formosa International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chunghwa Telecom and Formosa International.
Diversification Opportunities for Chunghwa Telecom and Formosa International
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Chunghwa and Formosa is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Chunghwa Telecom Co and Formosa International Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formosa International 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 Formosa International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Formosa International has no effect on the direction of Chunghwa Telecom i.e., Chunghwa Telecom and Formosa International go up and down completely randomly.
Pair Corralation between Chunghwa Telecom and Formosa International
Assuming the 90 days trading horizon Chunghwa Telecom Co is expected to generate 0.66 times more return on investment than Formosa International. However, Chunghwa Telecom Co is 1.53 times less risky than Formosa International. It trades about 0.09 of its potential returns per unit of risk. Formosa International Hotels is currently generating about -0.3 per unit of risk. If you would invest 12,250 in Chunghwa Telecom Co on August 28, 2024 and sell it today you would earn a total of 100.00 from holding Chunghwa Telecom Co or generate 0.82% 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. Formosa International Hotels
Performance |
| Timeline |
| Chunghwa Telecom |
| Formosa International |
Chunghwa Telecom and Formosa International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chunghwa Telecom and Formosa International
The main advantage of trading using opposite Chunghwa Telecom and Formosa International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chunghwa Telecom position performs unexpectedly, Formosa International 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 Formosa International will offset losses from the drop in Formosa International's long position.| Chunghwa Telecom vs. CTBC Financial Holding | Chunghwa Telecom vs. Fubon Financial Holding | Chunghwa Telecom vs. President Chain Store |
| Formosa International vs. President Chain Store | Formosa International vs. Uni President Enterprises Corp | Formosa International vs. Ambassador Hotel | Formosa International vs. Hotai Motor 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |