Correlation Between Alfen NV and Chunghwa Telecom
Can any of the company-specific risk be diversified away by investing in both Alfen NV 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 Alfen NV and Chunghwa Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alfen NV and Chunghwa Telecom Co, you can compare the effects of market volatilities on Alfen NV 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 Alfen NV with a short position of Chunghwa Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alfen NV and Chunghwa Telecom.
Diversification Opportunities for Alfen NV and Chunghwa Telecom
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Alfen and Chunghwa is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Alfen NV and Chunghwa Telecom Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chunghwa Telecom and Alfen NV 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 Alfen NV 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 Alfen NV i.e., Alfen NV and Chunghwa Telecom go up and down completely randomly.
Pair Corralation between Alfen NV and Chunghwa Telecom
Assuming the 90 days horizon Alfen NV is expected to generate 3.78 times more return on investment than Chunghwa Telecom. However, Alfen NV is 3.78 times more volatile than Chunghwa Telecom Co. It trades about 0.1 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 1,181 in Alfen NV on October 31, 2024 and sell it today you would earn a total of 67.00 from holding Alfen NV or generate 5.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alfen NV vs. Chunghwa Telecom Co
Performance |
| Timeline |
| Alfen NV |
| Chunghwa Telecom |
Alfen NV and Chunghwa Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alfen NV and Chunghwa Telecom
The main advantage of trading using opposite Alfen NV and Chunghwa Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alfen NV 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.| Alfen NV vs. TEN SQUARE GAMES | Alfen NV vs. CONTAGIOUS GAMING INC | Alfen NV vs. MOVIE GAMES SA | Alfen NV vs. Iridium Communications |
| Chunghwa Telecom vs. SCOTT TECHNOLOGY | Chunghwa Telecom vs. Charter Communications | Chunghwa Telecom vs. Spirent Communications plc | Chunghwa Telecom vs. G8 EDUCATION |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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