Correlation Between Caesars Entertainment, and Chunghwa Telecom

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Can any of the company-specific risk be diversified away by investing in both Caesars Entertainment, 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 Caesars Entertainment, and Chunghwa Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caesars Entertainment, and Chunghwa Telecom Co,, you can compare the effects of market volatilities on Caesars Entertainment, 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 Caesars Entertainment, with a short position of Chunghwa Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caesars Entertainment, and Chunghwa Telecom.

Diversification Opportunities for Caesars Entertainment, and Chunghwa Telecom

CaesarsChunghwaDiversified AwayCaesarsChunghwaDiversified Away100%
-0.01
  Correlation Coefficient

Good diversification

The 3 months correlation between Caesars and Chunghwa is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Caesars Entertainment, and Chunghwa Telecom Co, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chunghwa Telecom Co, and Caesars Entertainment, 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 Caesars Entertainment, 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 Co, has no effect on the direction of Caesars Entertainment, i.e., Caesars Entertainment, and Chunghwa Telecom go up and down completely randomly.

Pair Corralation between Caesars Entertainment, and Chunghwa Telecom

Assuming the 90 days trading horizon Caesars Entertainment, is expected to generate 3.18 times less return on investment than Chunghwa Telecom. But when comparing it to its historical volatility, Caesars Entertainment, is 3.18 times less risky than Chunghwa Telecom. It trades about 0.21 of its potential returns per unit of risk. Chunghwa Telecom Co, is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  4,316  in Chunghwa Telecom Co, on November 15, 2024 and sell it today you would earn a total of  1,256  from holding Chunghwa Telecom Co, or generate 29.1% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Caesars Entertainment,  vs.  Chunghwa Telecom Co,

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 -15-10-50
JavaScript chart by amCharts 3.21.15C2ZR34 C1HT34
       Timeline  
Caesars Entertainment, 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Caesars Entertainment, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Caesars Entertainment, is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb19.52020.52121.52222.52323.5
Chunghwa Telecom Co, 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Chunghwa Telecom Co, are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical indicators, Chunghwa Telecom sustained solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb4446485052545658

Caesars Entertainment, and Chunghwa Telecom Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.75-2.81-1.86-0.920.00.881.772.653.54 0.030.040.050.060.07
JavaScript chart by amCharts 3.21.15C2ZR34 C1HT34
       Returns  

Pair Trading with Caesars Entertainment, and Chunghwa Telecom

The main advantage of trading using opposite Caesars Entertainment, and Chunghwa Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caesars Entertainment, 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 Caesars Entertainment, 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.
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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