Correlation Between CITIC Telecom and Chunghwa Telecom
Can any of the company-specific risk be diversified away by investing in both CITIC Telecom 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 CITIC Telecom and Chunghwa Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CITIC Telecom International and Chunghwa Telecom Co, you can compare the effects of market volatilities on CITIC Telecom 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 CITIC Telecom with a short position of Chunghwa Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of CITIC Telecom and Chunghwa Telecom.
Diversification Opportunities for CITIC Telecom and Chunghwa Telecom
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between CITIC and Chunghwa is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding CITIC Telecom International and Chunghwa Telecom Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chunghwa Telecom and CITIC Telecom 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 CITIC Telecom International 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 CITIC Telecom i.e., CITIC Telecom and Chunghwa Telecom go up and down completely randomly.
Pair Corralation between CITIC Telecom and Chunghwa Telecom
Assuming the 90 days horizon CITIC Telecom International is expected to under-perform the Chunghwa Telecom. In addition to that, CITIC Telecom is 1.9 times more volatile than Chunghwa Telecom Co. It trades about -0.08 of its total potential returns per unit of risk. Chunghwa Telecom Co is currently generating about 0.13 per unit of volatility. If you would invest 3,620 in Chunghwa Telecom Co on November 3, 2024 and sell it today you would earn a total of 100.00 from holding Chunghwa Telecom Co or generate 2.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CITIC Telecom International vs. Chunghwa Telecom Co
Performance |
| Timeline |
| CITIC Telecom Intern |
| Chunghwa Telecom |
CITIC Telecom and Chunghwa Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CITIC Telecom and Chunghwa Telecom
The main advantage of trading using opposite CITIC Telecom and Chunghwa Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CITIC Telecom 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.| CITIC Telecom vs. EIDESVIK OFFSHORE NK | CITIC Telecom vs. BW OFFSHORE LTD | CITIC Telecom vs. ANGLO ASIAN MINING | CITIC Telecom vs. INSURANCE AUST GRP |
| Chunghwa Telecom vs. Zijin Mining Group | Chunghwa Telecom vs. Western Copper and | Chunghwa Telecom vs. MCEWEN MINING INC | Chunghwa Telecom vs. EMBARK EDUCATION LTD |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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