Correlation Between Teradata Corp and Chunghwa Telecom

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Can any of the company-specific risk be diversified away by investing in both Teradata Corp 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 Teradata Corp and Chunghwa Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teradata Corp and Chunghwa Telecom Co, you can compare the effects of market volatilities on Teradata Corp 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 Teradata Corp with a short position of Chunghwa Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teradata Corp and Chunghwa Telecom.

Diversification Opportunities for Teradata Corp and Chunghwa Telecom

TeradataChunghwaDiversified AwayTeradataChunghwaDiversified Away100%
0.44
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Teradata and Chunghwa is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Teradata Corp and Chunghwa Telecom Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chunghwa Telecom and Teradata Corp 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 Teradata Corp 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 Teradata Corp i.e., Teradata Corp and Chunghwa Telecom go up and down completely randomly.

Pair Corralation between Teradata Corp and Chunghwa Telecom

Assuming the 90 days horizon Teradata Corp is expected to generate 1.46 times more return on investment than Chunghwa Telecom. However, Teradata Corp is 1.46 times more volatile than Chunghwa Telecom Co. It trades about 0.08 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  3,000  in Teradata Corp on October 30, 2024 and sell it today you would earn a total of  60.00  from holding Teradata Corp or generate 2.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Teradata Corp  vs.  Chunghwa Telecom Co

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 -10-505
JavaScript chart by amCharts 3.21.153T4 CHWD
       Timeline  
Teradata Corp 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Teradata Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Teradata Corp is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan2727.52828.52929.53030.53131.5
Chunghwa Telecom 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Chunghwa Telecom Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Chunghwa Telecom is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan34.53535.53636.5

Teradata Corp and Chunghwa Telecom Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-5.09-3.81-2.54-1.260.02131.262.553.855.156.45 0.050.100.150.200.250.300.35
JavaScript chart by amCharts 3.21.153T4 CHWD
       Returns  

Pair Trading with Teradata Corp and Chunghwa Telecom

The main advantage of trading using opposite Teradata Corp and Chunghwa Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teradata Corp 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.
The idea behind Teradata Corp and Chunghwa Telecom Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.

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