Correlation Between Chunghwa Telecom and Hanover Insurance
Can any of the company-specific risk be diversified away by investing in both Chunghwa Telecom and Hanover Insurance 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 Hanover Insurance 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 The Hanover Insurance, you can compare the effects of market volatilities on Chunghwa Telecom and Hanover Insurance 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 Hanover Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chunghwa Telecom and Hanover Insurance.
Diversification Opportunities for Chunghwa Telecom and Hanover Insurance
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chunghwa and Hanover is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Chunghwa Telecom Co and The Hanover Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanover Insurance 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 Hanover Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanover Insurance has no effect on the direction of Chunghwa Telecom i.e., Chunghwa Telecom and Hanover Insurance go up and down completely randomly.
Pair Corralation between Chunghwa Telecom and Hanover Insurance
Assuming the 90 days trading horizon Chunghwa Telecom Co is expected to generate 0.57 times more return on investment than Hanover Insurance. However, Chunghwa Telecom Co is 1.74 times less risky than Hanover Insurance. It trades about 0.18 of its potential returns per unit of risk. The Hanover Insurance is currently generating about 0.06 per unit of risk. If you would invest 3,520 in Chunghwa Telecom Co on September 12, 2024 and sell it today you would earn a total of 100.00 from holding Chunghwa Telecom Co or generate 2.84% 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. The Hanover Insurance
Performance |
| Timeline |
| Chunghwa Telecom |
| Hanover Insurance |
Chunghwa Telecom and Hanover Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chunghwa Telecom and Hanover Insurance
The main advantage of trading using opposite Chunghwa Telecom and Hanover Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chunghwa Telecom position performs unexpectedly, Hanover Insurance 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 Hanover Insurance will offset losses from the drop in Hanover Insurance'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 |
| Hanover Insurance vs. The Peoples Insurance | Hanover Insurance vs. W R Berkley | Hanover Insurance vs. ZhongAn Online P |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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