Correlation Between Chunghwa Telecom and Aristocrat Leisure
Can any of the company-specific risk be diversified away by investing in both Chunghwa Telecom and Aristocrat Leisure 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 Aristocrat Leisure 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 Aristocrat Leisure Limited, you can compare the effects of market volatilities on Chunghwa Telecom and Aristocrat Leisure 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 Aristocrat Leisure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chunghwa Telecom and Aristocrat Leisure.
Diversification Opportunities for Chunghwa Telecom and Aristocrat Leisure
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chunghwa and Aristocrat is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Chunghwa Telecom Co and Aristocrat Leisure Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aristocrat Leisure 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 Aristocrat Leisure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aristocrat Leisure has no effect on the direction of Chunghwa Telecom i.e., Chunghwa Telecom and Aristocrat Leisure go up and down completely randomly.
Pair Corralation between Chunghwa Telecom and Aristocrat Leisure
Assuming the 90 days trading horizon Chunghwa Telecom is expected to generate 2.51 times less return on investment than Aristocrat Leisure. But when comparing it to its historical volatility, Chunghwa Telecom Co is 2.1 times less risky than Aristocrat Leisure. It trades about 0.15 of its potential returns per unit of risk. Aristocrat Leisure Limited is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 3,880 in Aristocrat Leisure Limited on September 13, 2024 and sell it today you would earn a total of 220.00 from holding Aristocrat Leisure Limited or generate 5.67% 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. Aristocrat Leisure Limited
Performance |
| Timeline |
| Chunghwa Telecom |
| Aristocrat Leisure |
Chunghwa Telecom and Aristocrat Leisure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chunghwa Telecom and Aristocrat Leisure
The main advantage of trading using opposite Chunghwa Telecom and Aristocrat Leisure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chunghwa Telecom position performs unexpectedly, Aristocrat Leisure 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 Aristocrat Leisure will offset losses from the drop in Aristocrat Leisure's long position.| Chunghwa Telecom vs. Superior Plus Corp | Chunghwa Telecom vs. SIVERS SEMICONDUCTORS AB | Chunghwa Telecom vs. Norsk Hydro ASA | Chunghwa Telecom vs. Reliance Steel Aluminum |
| Aristocrat Leisure vs. Carnegie Clean Energy | Aristocrat Leisure vs. Major Drilling Group | Aristocrat Leisure vs. ULTRA CLEAN HLDGS | Aristocrat Leisure vs. URBAN OUTFITTERS |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas |