Correlation Between China Television and Chunghwa Telecom
Can any of the company-specific risk be diversified away by investing in both China Television 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 China Television and Chunghwa Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Television Co and Chunghwa Telecom Co, you can compare the effects of market volatilities on China Television 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 China Television with a short position of Chunghwa Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Television and Chunghwa Telecom.
Diversification Opportunities for China Television and Chunghwa Telecom
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between China and Chunghwa is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding China Television 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 China Television 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 China Television 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 China Television i.e., China Television and Chunghwa Telecom go up and down completely randomly.
Pair Corralation between China Television and Chunghwa Telecom
Assuming the 90 days trading horizon China Television Co is expected to under-perform the Chunghwa Telecom. In addition to that, China Television is 3.38 times more volatile than Chunghwa Telecom Co. It trades about -0.07 of its total potential returns per unit of risk. Chunghwa Telecom Co is currently generating about -0.03 per unit of volatility. If you would invest 12,700 in Chunghwa Telecom Co on August 30, 2024 and sell it today you would lose (350.00) from holding Chunghwa Telecom Co or give up 2.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Television Co vs. Chunghwa Telecom Co
Performance |
| Timeline |
| China Television |
| Chunghwa Telecom |
China Television and Chunghwa Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Television and Chunghwa Telecom
The main advantage of trading using opposite China Television and Chunghwa Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Television 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.| China Television vs. Chunghwa Telecom Co | China Television vs. CTBC Financial Holding | China Television vs. Fubon Financial Holding | China Television vs. President Chain Store |
| Chunghwa Telecom vs. Taiwan Mobile Co | Chunghwa Telecom vs. China Steel Corp | Chunghwa Telecom vs. Formosa Plastics Corp | Chunghwa Telecom vs. Cathay Financial Holding |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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