Correlation Between Chunghwa Telecom and Gudeng Precision
Can any of the company-specific risk be diversified away by investing in both Chunghwa Telecom and Gudeng Precision 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 Gudeng Precision 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 Gudeng Precision Industrial, you can compare the effects of market volatilities on Chunghwa Telecom and Gudeng Precision 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 Gudeng Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chunghwa Telecom and Gudeng Precision.
Diversification Opportunities for Chunghwa Telecom and Gudeng Precision
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Chunghwa and Gudeng is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Chunghwa Telecom Co and Gudeng Precision Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gudeng Precision Ind 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 Gudeng Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gudeng Precision Ind has no effect on the direction of Chunghwa Telecom i.e., Chunghwa Telecom and Gudeng Precision go up and down completely randomly.
Pair Corralation between Chunghwa Telecom and Gudeng Precision
If you would invest 12,200 in Chunghwa Telecom Co on September 2, 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 Together |
| Strength | Weak |
| Accuracy | 4.55% |
| Values | Daily Returns |
Chunghwa Telecom Co vs. Gudeng Precision Industrial
Performance |
| Timeline |
| Chunghwa Telecom |
| Gudeng Precision Ind |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Chunghwa Telecom and Gudeng Precision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chunghwa Telecom and Gudeng Precision
The main advantage of trading using opposite Chunghwa Telecom and Gudeng Precision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chunghwa Telecom position performs unexpectedly, Gudeng Precision 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 Gudeng Precision will offset losses from the drop in Gudeng Precision'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 |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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