Correlation Between Astar and Chunghwa Telecom
Can any of the company-specific risk be diversified away by investing in both Astar 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 Astar and Chunghwa Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Astar and Chunghwa Telecom Co, you can compare the effects of market volatilities on Astar 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 Astar with a short position of Chunghwa Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astar and Chunghwa Telecom.
Diversification Opportunities for Astar and Chunghwa Telecom
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Astar and Chunghwa is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Astar and Chunghwa Telecom Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chunghwa Telecom and Astar 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 Astar 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 Astar i.e., Astar and Chunghwa Telecom go up and down completely randomly.
Pair Corralation between Astar and Chunghwa Telecom
Assuming the 90 days trading horizon Astar is expected to generate 5.3 times more return on investment than Chunghwa Telecom. However, Astar is 5.3 times more volatile than Chunghwa Telecom Co. It trades about 0.04 of its potential returns per unit of risk. Chunghwa Telecom Co is currently generating about 0.03 per unit of risk. If you would invest 6.06 in Astar on October 20, 2024 and sell it today you would earn a total of 0.30 from holding Astar or generate 4.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 93.75% |
| Values | Daily Returns |
Astar vs. Chunghwa Telecom Co
Performance |
| Timeline |
| Astar |
| Chunghwa Telecom |
Astar and Chunghwa Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Astar and Chunghwa Telecom
The main advantage of trading using opposite Astar and Chunghwa Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astar 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.The idea behind Astar and Chunghwa Telecom Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Chunghwa Telecom vs. ELECTRONIC ARTS | Chunghwa Telecom vs. Electronic Arts | Chunghwa Telecom vs. Commercial Vehicle Group | Chunghwa Telecom vs. FIRST SHIP LEASE |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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