Correlation Between Genertec Universal and Chunghwa Telecom
Can any of the company-specific risk be diversified away by investing in both Genertec Universal 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 Genertec Universal and Chunghwa Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Genertec Universal Medical and Chunghwa Telecom Co, you can compare the effects of market volatilities on Genertec Universal 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 Genertec Universal with a short position of Chunghwa Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genertec Universal and Chunghwa Telecom.
Diversification Opportunities for Genertec Universal and Chunghwa Telecom
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Genertec and Chunghwa is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Genertec Universal Medical and Chunghwa Telecom Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chunghwa Telecom and Genertec Universal 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 Genertec Universal Medical 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 Genertec Universal i.e., Genertec Universal and Chunghwa Telecom go up and down completely randomly.
Pair Corralation between Genertec Universal and Chunghwa Telecom
Assuming the 90 days horizon Genertec Universal Medical is expected to generate 3.36 times more return on investment than Chunghwa Telecom. However, Genertec Universal is 3.36 times more volatile than Chunghwa Telecom Co. It trades about 0.02 of its potential returns per unit of risk. Chunghwa Telecom Co is currently generating about 0.03 per unit of risk. If you would invest 56.00 in Genertec Universal Medical on October 11, 2024 and sell it today you would earn a total of 1.00 from holding Genertec Universal Medical or generate 1.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Genertec Universal Medical vs. Chunghwa Telecom Co
Performance |
| Timeline |
| Genertec Universal |
| Chunghwa Telecom |
Genertec Universal and Chunghwa Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Genertec Universal and Chunghwa Telecom
The main advantage of trading using opposite Genertec Universal and Chunghwa Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genertec Universal 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.| Genertec Universal vs. Webster Financial | Genertec Universal vs. United Insurance Holdings | Genertec Universal vs. Commonwealth Bank of | Genertec Universal vs. Gaming and Leisure |
| Chunghwa Telecom vs. PEPTONIC MEDICAL | Chunghwa Telecom vs. Genertec Universal Medical | Chunghwa Telecom vs. PLAYWAY SA ZY 10 | Chunghwa Telecom vs. Merit Medical Systems |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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