Correlation Between Chunghwa Telecom and Telkom Indonesia
Can any of the company-specific risk be diversified away by investing in both Chunghwa Telecom and Telkom Indonesia 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 Chunghwa Telecom and Telkom Indonesia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chunghwa Telecom Co and Telkom Indonesia Tbk, you can compare the effects of market volatilities on Chunghwa Telecom and Telkom Indonesia 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 Chunghwa Telecom with a short position of Telkom Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chunghwa Telecom and Telkom Indonesia.
Diversification Opportunities for Chunghwa Telecom and Telkom Indonesia
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chunghwa and Telkom is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Chunghwa Telecom Co and Telkom Indonesia Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telkom Indonesia Tbk and Chunghwa 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 Chunghwa Telecom Co are associated (or correlated) with Telkom Indonesia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telkom Indonesia Tbk has no effect on the direction of Chunghwa Telecom i.e., Chunghwa Telecom and Telkom Indonesia go up and down completely randomly.
Pair Corralation between Chunghwa Telecom and Telkom Indonesia
Considering the 90-day investment horizon Chunghwa Telecom Co is expected to generate 0.52 times more return on investment than Telkom Indonesia. However, Chunghwa Telecom Co is 1.93 times less risky than Telkom Indonesia. It trades about 0.02 of its potential returns per unit of risk. Telkom Indonesia Tbk is currently generating about -0.15 per unit of risk. If you would invest 3,790 in Chunghwa Telecom Co on August 27, 2024 and sell it today you would earn a total of 10.00 from holding Chunghwa Telecom Co or generate 0.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chunghwa Telecom Co vs. Telkom Indonesia Tbk
Performance |
| Timeline |
| Chunghwa Telecom |
| Telkom Indonesia Tbk |
Chunghwa Telecom and Telkom Indonesia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chunghwa Telecom and Telkom Indonesia
The main advantage of trading using opposite Chunghwa Telecom and Telkom Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chunghwa Telecom position performs unexpectedly, Telkom Indonesia 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 Telkom Indonesia will offset losses from the drop in Telkom Indonesia's long position.| Chunghwa Telecom vs. Grupo Televisa SAB | Chunghwa Telecom vs. Orange SA ADR | Chunghwa Telecom vs. Telefonica Brasil SA | Chunghwa Telecom vs. Telefonica SA ADR |
| Telkom Indonesia vs. Liberty Broadband Srs | Telkom Indonesia vs. Ribbon Communications | Telkom Indonesia vs. Liberty Broadband Srs | Telkom Indonesia vs. Shenandoah Telecommunications Co |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |