Correlation Between Federal Agricultural and Chunghwa Telecom
Can any of the company-specific risk be diversified away by investing in both Federal Agricultural 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 Federal Agricultural and Chunghwa Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federal Agricultural Mortgage and Chunghwa Telecom Co, you can compare the effects of market volatilities on Federal Agricultural 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 Federal Agricultural with a short position of Chunghwa Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Agricultural and Chunghwa Telecom.
Diversification Opportunities for Federal Agricultural and Chunghwa Telecom
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Federal and Chunghwa is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Federal Agricultural Mortgage and Chunghwa Telecom Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chunghwa Telecom and Federal Agricultural 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 Federal Agricultural Mortgage 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 Federal Agricultural i.e., Federal Agricultural and Chunghwa Telecom go up and down completely randomly.
Pair Corralation between Federal Agricultural and Chunghwa Telecom
Assuming the 90 days horizon Federal Agricultural Mortgage is expected to under-perform the Chunghwa Telecom. In addition to that, Federal Agricultural is 1.64 times more volatile than Chunghwa Telecom Co. It trades about -0.09 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 3,580 in Chunghwa Telecom Co on October 23, 2024 and sell it today you would earn a total of 40.00 from holding Chunghwa Telecom Co or generate 1.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federal Agricultural Mortgage vs. Chunghwa Telecom Co
Performance |
| Timeline |
| Federal Agricultural |
| Chunghwa Telecom |
Federal Agricultural and Chunghwa Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Agricultural and Chunghwa Telecom
The main advantage of trading using opposite Federal Agricultural and Chunghwa Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Agricultural 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.| Federal Agricultural vs. COLUMBIA SPORTSWEAR | Federal Agricultural vs. PLAYWAY SA ZY 10 | Federal Agricultural vs. Choice Hotels International | Federal Agricultural vs. PLAYSTUDIOS A DL 0001 |
| Chunghwa Telecom vs. ETFS Coffee ETC | Chunghwa Telecom vs. ARDAGH METAL PACDL 0001 | Chunghwa Telecom vs. Harmony Gold Mining | Chunghwa Telecom vs. Calibre Mining Corp |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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