Correlation Between Chunghwa Telecom and JD
Can any of the company-specific risk be diversified away by investing in both Chunghwa Telecom and JD 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 JD 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 JD Inc, you can compare the effects of market volatilities on Chunghwa Telecom and JD 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 JD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chunghwa Telecom and JD.
Diversification Opportunities for Chunghwa Telecom and JD
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Chunghwa and JD is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Chunghwa Telecom Co and JD Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD Inc 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 JD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD Inc has no effect on the direction of Chunghwa Telecom i.e., Chunghwa Telecom and JD go up and down completely randomly.
Pair Corralation between Chunghwa Telecom and JD
Assuming the 90 days trading horizon Chunghwa Telecom Co is expected to generate 0.47 times more return on investment than JD. However, Chunghwa Telecom Co is 2.14 times less risky than JD. It trades about 0.11 of its potential returns per unit of risk. JD Inc is currently generating about -0.04 per unit of risk. If you would invest 3,460 in Chunghwa Telecom Co on September 5, 2024 and sell it today you would earn a total of 120.00 from holding Chunghwa Telecom Co or generate 3.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chunghwa Telecom Co vs. JD Inc
Performance |
| Timeline |
| Chunghwa Telecom |
| JD Inc |
Chunghwa Telecom and JD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chunghwa Telecom and JD
The main advantage of trading using opposite Chunghwa Telecom and JD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chunghwa Telecom position performs unexpectedly, JD 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 JD will offset losses from the drop in JD's long position.| Chunghwa Telecom vs. Fast Retailing Co | Chunghwa Telecom vs. QURATE RETAIL INC | Chunghwa Telecom vs. RELIANCE STEEL AL | Chunghwa Telecom vs. BlueScope Steel Limited |
| JD vs. SK TELECOM TDADR | JD vs. Chunghwa Telecom Co | JD vs. Zijin Mining Group | JD vs. Cogent Communications Holdings |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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