Correlation Between Chunghwa Telecom and AGF Management
Can any of the company-specific risk be diversified away by investing in both Chunghwa Telecom and AGF Management 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 AGF Management 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 AGF Management Limited, you can compare the effects of market volatilities on Chunghwa Telecom and AGF Management 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 AGF Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chunghwa Telecom and AGF Management.
Diversification Opportunities for Chunghwa Telecom and AGF Management
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Chunghwa and AGF is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Chunghwa Telecom Co and AGF Management Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGF Management 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 AGF Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGF Management has no effect on the direction of Chunghwa Telecom i.e., Chunghwa Telecom and AGF Management go up and down completely randomly.
Pair Corralation between Chunghwa Telecom and AGF Management
Assuming the 90 days trading horizon Chunghwa Telecom is expected to generate 6.94 times less return on investment than AGF Management. But when comparing it to its historical volatility, Chunghwa Telecom Co is 2.09 times less risky than AGF Management. It trades about 0.03 of its potential returns per unit of risk. AGF Management Limited is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 460.00 in AGF Management Limited on September 3, 2024 and sell it today you would earn a total of 280.00 from holding AGF Management Limited or generate 60.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chunghwa Telecom Co vs. AGF Management Limited
Performance |
| Timeline |
| Chunghwa Telecom |
| AGF Management |
Chunghwa Telecom and AGF Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chunghwa Telecom and AGF Management
The main advantage of trading using opposite Chunghwa Telecom and AGF Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chunghwa Telecom position performs unexpectedly, AGF Management 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 AGF Management will offset losses from the drop in AGF Management'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 |
| AGF Management vs. American Eagle Outfitters | AGF Management vs. Citic Telecom International | AGF Management vs. Warner Music Group | AGF Management vs. Spirent Communications plc |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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