Correlation Between Chunghwa Telecom and International Games
Can any of the company-specific risk be diversified away by investing in both Chunghwa Telecom and International Games 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 International Games 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 International Games System, you can compare the effects of market volatilities on Chunghwa Telecom and International Games 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 International Games. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chunghwa Telecom and International Games.
Diversification Opportunities for Chunghwa Telecom and International Games
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chunghwa and International is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Chunghwa Telecom Co and International Games System in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Games 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 International Games. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Games has no effect on the direction of Chunghwa Telecom i.e., Chunghwa Telecom and International Games go up and down completely randomly.
Pair Corralation between Chunghwa Telecom and International Games
Assuming the 90 days trading horizon Chunghwa Telecom is expected to generate 198.09 times less return on investment than International Games. But when comparing it to its historical volatility, Chunghwa Telecom Co is 98.27 times less risky than International Games. It trades about 0.03 of its potential returns per unit of risk. International Games System is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 17,627 in International Games System on August 24, 2024 and sell it today you would earn a total of 81,773 from holding International Games System or generate 463.91% 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. International Games System
Performance |
| Timeline |
| Chunghwa Telecom |
| International Games |
Chunghwa Telecom and International Games Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chunghwa Telecom and International Games
The main advantage of trading using opposite Chunghwa Telecom and International Games positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chunghwa Telecom position performs unexpectedly, International Games 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 International Games will offset losses from the drop in International Games' 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 |
| International Games vs. HOYA Resort Hotel | International Games vs. Chunghwa Telecom Co | International Games vs. FDC International Hotels | International Games vs. Formosa Electronic Industries |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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