Correlation Between Chunghwa Telecom and EMemory Technology
Can any of the company-specific risk be diversified away by investing in both Chunghwa Telecom and EMemory Technology 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 EMemory Technology 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 eMemory Technology, you can compare the effects of market volatilities on Chunghwa Telecom and EMemory Technology 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 EMemory Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chunghwa Telecom and EMemory Technology.
Diversification Opportunities for Chunghwa Telecom and EMemory Technology
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Chunghwa and EMemory is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Chunghwa Telecom Co and eMemory Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eMemory Technology 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 EMemory Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of eMemory Technology has no effect on the direction of Chunghwa Telecom i.e., Chunghwa Telecom and EMemory Technology go up and down completely randomly.
Pair Corralation between Chunghwa Telecom and EMemory Technology
Assuming the 90 days trading horizon Chunghwa Telecom Co is expected to generate 0.15 times more return on investment than EMemory Technology. However, Chunghwa Telecom Co is 6.76 times less risky than EMemory Technology. It trades about 0.08 of its potential returns per unit of risk. eMemory Technology is currently generating about -0.11 per unit of risk. If you would invest 12,200 in Chunghwa Telecom Co on September 1, 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 Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Chunghwa Telecom Co vs. eMemory Technology
Performance |
| Timeline |
| Chunghwa Telecom |
| eMemory Technology |
Chunghwa Telecom and EMemory Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chunghwa Telecom and EMemory Technology
The main advantage of trading using opposite Chunghwa Telecom and EMemory Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chunghwa Telecom position performs unexpectedly, EMemory Technology 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 EMemory Technology will offset losses from the drop in EMemory Technology'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 |
| EMemory Technology vs. Nan Ya Printed | EMemory Technology vs. Global Unichip Corp | EMemory Technology vs. Aspeed Technology | EMemory Technology vs. Alchip Technologies |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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