Correlation Between Chunghwa Telecom and Mega Financial
Can any of the company-specific risk be diversified away by investing in both Chunghwa Telecom and Mega Financial 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 Mega Financial 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 Mega Financial Holding, you can compare the effects of market volatilities on Chunghwa Telecom and Mega Financial 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 Mega Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chunghwa Telecom and Mega Financial.
Diversification Opportunities for Chunghwa Telecom and Mega Financial
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Chunghwa and Mega is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Chunghwa Telecom Co and Mega Financial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mega Financial Holding 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 Mega Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mega Financial Holding has no effect on the direction of Chunghwa Telecom i.e., Chunghwa Telecom and Mega Financial go up and down completely randomly.
Pair Corralation between Chunghwa Telecom and Mega Financial
Assuming the 90 days trading horizon Chunghwa Telecom Co is expected to generate 0.55 times more return on investment than Mega Financial. However, Chunghwa Telecom Co is 1.82 times less risky than Mega Financial. It trades about 0.03 of its potential returns per unit of risk. Mega Financial Holding is currently generating about 0.0 per unit of risk. If you would invest 12,000 in Chunghwa Telecom Co on January 22, 2025 and sell it today you would earn a total of 700.00 from holding Chunghwa Telecom Co or generate 5.83% 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. Mega Financial Holding
Performance |
| Timeline |
| Chunghwa Telecom |
| Mega Financial Holding |
Chunghwa Telecom and Mega Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chunghwa Telecom and Mega Financial
The main advantage of trading using opposite Chunghwa Telecom and Mega Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chunghwa Telecom position performs unexpectedly, Mega Financial 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 Mega Financial will offset losses from the drop in Mega Financial'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 |
| Mega Financial vs. CTBC Financial Holding | Mega Financial vs. Fubon Financial Holding | Mega Financial vs. First Financial Holding | Mega Financial vs. Cathay Financial Holding |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance |