Correlation Between Chunghwa Telecom and Ping An
Can any of the company-specific risk be diversified away by investing in both Chunghwa Telecom and Ping An 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 Ping An 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 Ping An Healthcare, you can compare the effects of market volatilities on Chunghwa Telecom and Ping An 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 Ping An. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chunghwa Telecom and Ping An.
Diversification Opportunities for Chunghwa Telecom and Ping An
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Chunghwa and Ping is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Chunghwa Telecom Co and Ping An Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ping An Healthcare 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 Ping An. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ping An Healthcare has no effect on the direction of Chunghwa Telecom i.e., Chunghwa Telecom and Ping An go up and down completely randomly.
Pair Corralation between Chunghwa Telecom and Ping An
Assuming the 90 days trading horizon Chunghwa Telecom is expected to generate 7.38 times less return on investment than Ping An. But when comparing it to its historical volatility, Chunghwa Telecom Co is 3.71 times less risky than Ping An. It trades about 0.04 of its potential returns per unit of risk. Ping An Healthcare is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 134.00 in Ping An Healthcare on September 3, 2024 and sell it today you would earn a total of 41.00 from holding Ping An Healthcare or generate 30.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chunghwa Telecom Co vs. Ping An Healthcare
Performance |
| Timeline |
| Chunghwa Telecom |
| Ping An Healthcare |
Chunghwa Telecom and Ping An Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chunghwa Telecom and Ping An
The main advantage of trading using opposite Chunghwa Telecom and Ping An positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chunghwa Telecom position performs unexpectedly, Ping An 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 Ping An will offset losses from the drop in Ping An's long position.| Chunghwa Telecom vs. INTERSHOP Communications Aktiengesellschaft | Chunghwa Telecom vs. Aozora Bank | Chunghwa Telecom vs. Solstad Offshore ASA | Chunghwa Telecom vs. BANKINTER ADR 2007 |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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