Correlation Between Chunghwa Telecom and Taiwan Cogeneration
Can any of the company-specific risk be diversified away by investing in both Chunghwa Telecom and Taiwan Cogeneration 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 Taiwan Cogeneration 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 Taiwan Cogeneration Corp, you can compare the effects of market volatilities on Chunghwa Telecom and Taiwan Cogeneration 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 Taiwan Cogeneration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chunghwa Telecom and Taiwan Cogeneration.
Diversification Opportunities for Chunghwa Telecom and Taiwan Cogeneration
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Chunghwa and Taiwan is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Chunghwa Telecom Co and Taiwan Cogeneration Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Cogeneration Corp 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 Taiwan Cogeneration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Cogeneration Corp has no effect on the direction of Chunghwa Telecom i.e., Chunghwa Telecom and Taiwan Cogeneration go up and down completely randomly.
Pair Corralation between Chunghwa Telecom and Taiwan Cogeneration
Assuming the 90 days trading horizon Chunghwa Telecom Co is expected to generate 0.43 times more return on investment than Taiwan Cogeneration. However, Chunghwa Telecom Co is 2.33 times less risky than Taiwan Cogeneration. It trades about 0.09 of its potential returns per unit of risk. Taiwan Cogeneration Corp is currently generating about 0.0 per unit of risk. If you would invest 12,250 in Chunghwa Telecom Co on August 28, 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 | 100.0% |
| Values | Daily Returns |
Chunghwa Telecom Co vs. Taiwan Cogeneration Corp
Performance |
| Timeline |
| Chunghwa Telecom |
| Taiwan Cogeneration Corp |
Chunghwa Telecom and Taiwan Cogeneration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chunghwa Telecom and Taiwan Cogeneration
The main advantage of trading using opposite Chunghwa Telecom and Taiwan Cogeneration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chunghwa Telecom position performs unexpectedly, Taiwan Cogeneration 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 Taiwan Cogeneration will offset losses from the drop in Taiwan Cogeneration'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 |
| Taiwan Cogeneration vs. Taiwan Secom Co | Taiwan Cogeneration vs. Taiwan Shin Kong | Taiwan Cogeneration vs. Leatec Fine Ceramics | Taiwan Cogeneration vs. Information Technology Total |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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