Correlation Between Chunghwa Telecom and Taishin Financial
Can any of the company-specific risk be diversified away by investing in both Chunghwa Telecom and Taishin 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 Taishin 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 Taishin Financial Holding, you can compare the effects of market volatilities on Chunghwa Telecom and Taishin 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 Taishin Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chunghwa Telecom and Taishin Financial.
Diversification Opportunities for Chunghwa Telecom and Taishin Financial
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Chunghwa and Taishin is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Chunghwa Telecom Co and Taishin Financial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taishin 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 Taishin Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taishin Financial Holding has no effect on the direction of Chunghwa Telecom i.e., Chunghwa Telecom and Taishin Financial go up and down completely randomly.
Pair Corralation between Chunghwa Telecom and Taishin Financial
Assuming the 90 days trading horizon Chunghwa Telecom Co is expected to generate 1.82 times more return on investment than Taishin Financial. However, Chunghwa Telecom is 1.82 times more volatile than Taishin Financial Holding. It trades about 0.03 of its potential returns per unit of risk. Taishin Financial Holding is currently generating about 0.01 per unit of risk. If you would invest 11,250 in Chunghwa Telecom Co on August 24, 2024 and sell it today you would earn a total of 1,050 from holding Chunghwa Telecom Co or generate 9.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chunghwa Telecom Co vs. Taishin Financial Holding
Performance |
| Timeline |
| Chunghwa Telecom |
| Taishin Financial Holding |
Chunghwa Telecom and Taishin Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chunghwa Telecom and Taishin Financial
The main advantage of trading using opposite Chunghwa Telecom and Taishin Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chunghwa Telecom position performs unexpectedly, Taishin 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 Taishin Financial will offset losses from the drop in Taishin 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 |
| Taishin Financial vs. Mega Financial Holding | Taishin Financial vs. Taiwan Cooperative Financial | Taishin Financial vs. ESUN Financial Holding | Taishin Financial vs. Hua Nan Financial |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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