Correlation Between HOYA Resort and Chunghwa Telecom
Can any of the company-specific risk be diversified away by investing in both HOYA Resort and Chunghwa Telecom 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 HOYA Resort and Chunghwa Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HOYA Resort Hotel and Chunghwa Telecom Co, you can compare the effects of market volatilities on HOYA Resort and Chunghwa Telecom 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 HOYA Resort with a short position of Chunghwa Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of HOYA Resort and Chunghwa Telecom.
Diversification Opportunities for HOYA Resort and Chunghwa Telecom
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between HOYA and Chunghwa is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding HOYA Resort Hotel and Chunghwa Telecom Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chunghwa Telecom and HOYA Resort 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 HOYA Resort Hotel are associated (or correlated) with Chunghwa Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chunghwa Telecom has no effect on the direction of HOYA Resort i.e., HOYA Resort and Chunghwa Telecom go up and down completely randomly.
Pair Corralation between HOYA Resort and Chunghwa Telecom
Assuming the 90 days trading horizon HOYA Resort Hotel is expected to under-perform the Chunghwa Telecom. In addition to that, HOYA Resort is 4.78 times more volatile than Chunghwa Telecom Co. It trades about 0.0 of its total potential returns per unit of risk. Chunghwa Telecom Co is currently generating about 0.01 per unit of volatility. If you would invest 12,050 in Chunghwa Telecom Co on August 24, 2024 and sell it today you would earn a total of 250.00 from holding Chunghwa Telecom Co or generate 2.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HOYA Resort Hotel vs. Chunghwa Telecom Co
Performance |
| Timeline |
| HOYA Resort Hotel |
| Chunghwa Telecom |
HOYA Resort and Chunghwa Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HOYA Resort and Chunghwa Telecom
The main advantage of trading using opposite HOYA Resort and Chunghwa Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HOYA Resort position performs unexpectedly, Chunghwa Telecom 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 Chunghwa Telecom will offset losses from the drop in Chunghwa Telecom's long position.| HOYA Resort vs. Formosa International Hotels | HOYA Resort vs. Ambassador Hotel | HOYA Resort vs. FDC International Hotels | HOYA Resort vs. First Hotel Co |
| Chunghwa Telecom vs. Taiwan Mobile Co | Chunghwa Telecom vs. China Steel Corp | Chunghwa Telecom vs. Formosa Plastics Corp | Chunghwa Telecom vs. Cathay Financial Holding |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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