Correlation Between LIFENET INSURANCE and Chunghwa Telecom
Can any of the company-specific risk be diversified away by investing in both LIFENET INSURANCE 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 LIFENET INSURANCE and Chunghwa Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LIFENET INSURANCE CO and Chunghwa Telecom Co, you can compare the effects of market volatilities on LIFENET INSURANCE 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 LIFENET INSURANCE with a short position of Chunghwa Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of LIFENET INSURANCE and Chunghwa Telecom.
Diversification Opportunities for LIFENET INSURANCE and Chunghwa Telecom
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between LIFENET and Chunghwa is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding LIFENET INSURANCE 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 LIFENET INSURANCE 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 LIFENET INSURANCE 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 LIFENET INSURANCE i.e., LIFENET INSURANCE and Chunghwa Telecom go up and down completely randomly.
Pair Corralation between LIFENET INSURANCE and Chunghwa Telecom
Assuming the 90 days horizon LIFENET INSURANCE CO is expected to under-perform the Chunghwa Telecom. In addition to that, LIFENET INSURANCE is 3.16 times more volatile than Chunghwa Telecom Co. It trades about -0.04 of its total potential returns per unit of risk. Chunghwa Telecom Co is currently generating about 0.18 per unit of volatility. If you would invest 3,520 in Chunghwa Telecom Co on September 12, 2024 and sell it today you would earn a total of 100.00 from holding Chunghwa Telecom Co or generate 2.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LIFENET INSURANCE CO vs. Chunghwa Telecom Co
Performance |
| Timeline |
| LIFENET INSURANCE |
| Chunghwa Telecom |
LIFENET INSURANCE and Chunghwa Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LIFENET INSURANCE and Chunghwa Telecom
The main advantage of trading using opposite LIFENET INSURANCE and Chunghwa Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LIFENET INSURANCE 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.| LIFENET INSURANCE vs. Xtrackers LevDAX | LIFENET INSURANCE vs. Lyxor 1 | LIFENET INSURANCE vs. Xtrackers ShortDAX |
| Chunghwa Telecom vs. Superior Plus Corp | Chunghwa Telecom vs. SIVERS SEMICONDUCTORS AB | Chunghwa Telecom vs. Norsk Hydro ASA | Chunghwa Telecom vs. Reliance Steel Aluminum |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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