Correlation Between Chunghwa Telecom and WinMate Communication
Can any of the company-specific risk be diversified away by investing in both Chunghwa Telecom and WinMate Communication 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 WinMate Communication 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 WinMate Communication INC, you can compare the effects of market volatilities on Chunghwa Telecom and WinMate Communication 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 WinMate Communication. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chunghwa Telecom and WinMate Communication.
Diversification Opportunities for Chunghwa Telecom and WinMate Communication
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chunghwa and WinMate is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Chunghwa Telecom Co and WinMate Communication INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WinMate Communication INC 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 WinMate Communication. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WinMate Communication INC has no effect on the direction of Chunghwa Telecom i.e., Chunghwa Telecom and WinMate Communication go up and down completely randomly.
Pair Corralation between Chunghwa Telecom and WinMate Communication
Assuming the 90 days trading horizon Chunghwa Telecom is expected to generate 13.0 times less return on investment than WinMate Communication. But when comparing it to its historical volatility, Chunghwa Telecom Co is 7.56 times less risky than WinMate Communication. It trades about 0.14 of its potential returns per unit of risk. WinMate Communication INC is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 15,900 in WinMate Communication INC on November 28, 2024 and sell it today you would earn a total of 1,650 from holding WinMate Communication INC or generate 10.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chunghwa Telecom Co vs. WinMate Communication INC
Performance |
| Timeline |
| Chunghwa Telecom |
| WinMate Communication INC |
Chunghwa Telecom and WinMate Communication Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chunghwa Telecom and WinMate Communication
The main advantage of trading using opposite Chunghwa Telecom and WinMate Communication positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chunghwa Telecom position performs unexpectedly, WinMate Communication 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 WinMate Communication will offset losses from the drop in WinMate Communication'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 |
| WinMate Communication vs. Advantech Co | WinMate Communication vs. IEI Integration Corp | WinMate Communication vs. Flytech Technology Co | WinMate Communication vs. Ennoconn Corp |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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