Correlation Between Chunghwa Telecom and Alfa Financial
Can any of the company-specific risk be diversified away by investing in both Chunghwa Telecom and Alfa Financial 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 Alfa Financial 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 Alfa Financial Software, you can compare the effects of market volatilities on Chunghwa Telecom and Alfa Financial 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 Alfa Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chunghwa Telecom and Alfa Financial.
Diversification Opportunities for Chunghwa Telecom and Alfa Financial
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Chunghwa and Alfa is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Chunghwa Telecom Co and Alfa Financial Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alfa Financial Software 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 Alfa Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alfa Financial Software has no effect on the direction of Chunghwa Telecom i.e., Chunghwa Telecom and Alfa Financial go up and down completely randomly.
Pair Corralation between Chunghwa Telecom and Alfa Financial
Assuming the 90 days trading horizon Chunghwa Telecom Co is expected to generate about the same return on investment as Alfa Financial Software. But, Chunghwa Telecom Co is 1.47 times less risky than Alfa Financial. It trades about 0.11 of its potential returns per unit of risk. Alfa Financial Software is currently generating about 0.08 per unit of risk. If you would invest 250.00 in Alfa Financial Software on September 5, 2024 and sell it today you would earn a total of 8.00 from holding Alfa Financial Software or generate 3.2% 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. Alfa Financial Software
Performance |
| Timeline |
| Chunghwa Telecom |
| Alfa Financial Software |
Chunghwa Telecom and Alfa Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chunghwa Telecom and Alfa Financial
The main advantage of trading using opposite Chunghwa Telecom and Alfa Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chunghwa Telecom position performs unexpectedly, Alfa Financial 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 Alfa Financial will offset losses from the drop in Alfa Financial'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 |
| Alfa Financial vs. Apple Inc | Alfa Financial vs. Apple Inc | Alfa Financial vs. Apple Inc | Alfa Financial vs. Apple Inc |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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