Correlation Between AGF Management and Chunghwa Telecom
Can any of the company-specific risk be diversified away by investing in both AGF Management 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 AGF Management and Chunghwa Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AGF Management Limited and Chunghwa Telecom Co, you can compare the effects of market volatilities on AGF Management 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 AGF Management with a short position of Chunghwa Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGF Management and Chunghwa Telecom.
Diversification Opportunities for AGF Management and Chunghwa Telecom
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between AGF and Chunghwa is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding AGF Management Limited and Chunghwa Telecom Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chunghwa Telecom and AGF Management 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 AGF Management Limited 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 AGF Management i.e., AGF Management and Chunghwa Telecom go up and down completely randomly.
Pair Corralation between AGF Management and Chunghwa Telecom
Assuming the 90 days horizon AGF Management Limited is expected to generate 1.42 times more return on investment than Chunghwa Telecom. However, AGF Management is 1.42 times more volatile than Chunghwa Telecom Co. It trades about 0.2 of its potential returns per unit of risk. Chunghwa Telecom Co is currently generating about 0.15 per unit of risk. If you would invest 670.00 in AGF Management Limited on September 2, 2024 and sell it today you would earn a total of 60.00 from holding AGF Management Limited or generate 8.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AGF Management Limited vs. Chunghwa Telecom Co
Performance |
| Timeline |
| AGF Management |
| Chunghwa Telecom |
AGF Management and Chunghwa Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AGF Management and Chunghwa Telecom
The main advantage of trading using opposite AGF Management and Chunghwa Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AGF Management 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.| AGF Management vs. Ameriprise Financial | AGF Management vs. Ares Management Corp | AGF Management vs. Superior Plus Corp | AGF Management vs. NMI Holdings |
| Chunghwa Telecom vs. Deutsche Telekom AG | Chunghwa Telecom vs. Superior Plus Corp | Chunghwa Telecom vs. NMI Holdings | Chunghwa Telecom vs. Origin Agritech |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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