Correlation Between Taishin Financial and Chunghwa Telecom
Can any of the company-specific risk be diversified away by investing in both Taishin Financial 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 Taishin Financial and Chunghwa Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taishin Financial Holding and Chunghwa Telecom Co, you can compare the effects of market volatilities on Taishin Financial 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 Taishin Financial with a short position of Chunghwa Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taishin Financial and Chunghwa Telecom.
Diversification Opportunities for Taishin Financial and Chunghwa Telecom
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Taishin and Chunghwa is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Taishin Financial Holding and Chunghwa Telecom Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chunghwa Telecom and Taishin Financial 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 Taishin Financial Holding 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 Taishin Financial i.e., Taishin Financial and Chunghwa Telecom go up and down completely randomly.
Pair Corralation between Taishin Financial and Chunghwa Telecom
Assuming the 90 days trading horizon Taishin Financial Holding is expected to generate 0.33 times more return on investment than Chunghwa Telecom. However, Taishin Financial Holding is 3.02 times less risky than Chunghwa Telecom. It trades about -0.02 of its potential returns per unit of risk. Chunghwa Telecom Co is currently generating about -0.1 per unit of risk. If you would invest 5,120 in Taishin Financial Holding on August 28, 2024 and sell it today you would lose (10.00) from holding Taishin Financial Holding or give up 0.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taishin Financial Holding vs. Chunghwa Telecom Co
Performance |
| Timeline |
| Taishin Financial Holding |
| Chunghwa Telecom |
Taishin Financial and Chunghwa Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taishin Financial and Chunghwa Telecom
The main advantage of trading using opposite Taishin Financial and Chunghwa Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taishin Financial 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.| Taishin Financial vs. Mega Financial Holding | Taishin Financial vs. Taiwan Cooperative Financial | Taishin Financial vs. ESUN Financial Holding | Taishin Financial vs. Hua Nan Financial |
| Chunghwa Telecom vs. CTBC Financial Holding | Chunghwa Telecom vs. Fubon Financial Holding | Chunghwa Telecom vs. President Chain Store |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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