Correlation Between Chia Chang and Chunghwa Telecom
Can any of the company-specific risk be diversified away by investing in both Chia Chang 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 Chia Chang and Chunghwa Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chia Chang Co and Chunghwa Telecom Co, you can compare the effects of market volatilities on Chia Chang 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 Chia Chang with a short position of Chunghwa Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chia Chang and Chunghwa Telecom.
Diversification Opportunities for Chia Chang and Chunghwa Telecom
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Chia and Chunghwa is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Chia Chang Co and Chunghwa Telecom Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chunghwa Telecom and Chia Chang 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 Chia Chang Co 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 Chia Chang i.e., Chia Chang and Chunghwa Telecom go up and down completely randomly.
Pair Corralation between Chia Chang and Chunghwa Telecom
Assuming the 90 days trading horizon Chia Chang Co is expected to under-perform the Chunghwa Telecom. In addition to that, Chia Chang is 2.77 times more volatile than Chunghwa Telecom Co. It trades about -0.13 of its total potential returns per unit of risk. Chunghwa Telecom Co is currently generating about 0.08 per unit of volatility. If you would invest 12,250 in Chunghwa Telecom Co on September 13, 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 |
Chia Chang Co vs. Chunghwa Telecom Co
Performance |
| Timeline |
| Chia Chang |
| Chunghwa Telecom |
Chia Chang and Chunghwa Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chia Chang and Chunghwa Telecom
The main advantage of trading using opposite Chia Chang and Chunghwa Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chia Chang 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.| Chia Chang vs. FSP Technology | Chia Chang vs. HannStar Board Corp | Chia Chang vs. Taiwan Surface Mounting | Chia Chang vs. Emerging Display Technologies |
| Chunghwa Telecom vs. Cheng Mei Materials | Chunghwa Telecom vs. Lemtech Holdings Co | Chunghwa Telecom vs. Chia Chang Co | Chunghwa Telecom vs. Ruentex Development Co |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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