Correlation Between Chunghwa Telecom and Airbus SE
Can any of the company-specific risk be diversified away by investing in both Chunghwa Telecom and Airbus SE 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 Airbus SE 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 Airbus SE, you can compare the effects of market volatilities on Chunghwa Telecom and Airbus SE 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 Airbus SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chunghwa Telecom and Airbus SE.
Diversification Opportunities for Chunghwa Telecom and Airbus SE
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chunghwa and Airbus is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Chunghwa Telecom Co and Airbus SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airbus SE 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 Airbus SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airbus SE has no effect on the direction of Chunghwa Telecom i.e., Chunghwa Telecom and Airbus SE go up and down completely randomly.
Pair Corralation between Chunghwa Telecom and Airbus SE
Assuming the 90 days trading horizon Chunghwa Telecom is expected to generate 1.69 times less return on investment than Airbus SE. But when comparing it to its historical volatility, Chunghwa Telecom Co is 1.98 times less risky than Airbus SE. It trades about 0.06 of its potential returns per unit of risk. Airbus SE is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3,259 in Airbus SE on November 6, 2024 and sell it today you would earn a total of 861.00 from holding Airbus SE or generate 26.42% 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. Airbus SE
Performance |
| Timeline |
| Chunghwa Telecom |
| Airbus SE |
Chunghwa Telecom and Airbus SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chunghwa Telecom and Airbus SE
The main advantage of trading using opposite Chunghwa Telecom and Airbus SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chunghwa Telecom position performs unexpectedly, Airbus SE 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 Airbus SE will offset losses from the drop in Airbus SE's long position.| Chunghwa Telecom vs. Zoom Video Communications | Chunghwa Telecom vs. China Communications Services | Chunghwa Telecom vs. Cairo Communication SpA | Chunghwa Telecom vs. Hua Hong Semiconductor |
| Airbus SE vs. MOVIE GAMES SA | Airbus SE vs. TRAVEL LEISURE DL 01 | Airbus SE vs. GameStop Corp | Airbus SE vs. LG Display Co |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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