Correlation Between Chunghwa Telecom and BII Railway
Can any of the company-specific risk be diversified away by investing in both Chunghwa Telecom and BII Railway 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 BII Railway 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 BII Railway Transportation, you can compare the effects of market volatilities on Chunghwa Telecom and BII Railway 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 BII Railway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chunghwa Telecom and BII Railway.
Diversification Opportunities for Chunghwa Telecom and BII Railway
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Chunghwa and BII is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Chunghwa Telecom Co and BII Railway Transportation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BII Railway Transpor 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 BII Railway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BII Railway Transpor has no effect on the direction of Chunghwa Telecom i.e., Chunghwa Telecom and BII Railway go up and down completely randomly.
Pair Corralation between Chunghwa Telecom and BII Railway
Assuming the 90 days trading horizon Chunghwa Telecom Co is expected to generate 0.25 times more return on investment than BII Railway. However, Chunghwa Telecom Co is 3.97 times less risky than BII Railway. It trades about 0.04 of its potential returns per unit of risk. BII Railway Transportation is currently generating about 0.01 per unit of risk. If you would invest 3,089 in Chunghwa Telecom Co on September 4, 2024 and sell it today you would earn a total of 511.00 from holding Chunghwa Telecom Co or generate 16.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chunghwa Telecom Co vs. BII Railway Transportation
Performance |
| Timeline |
| Chunghwa Telecom |
| BII Railway Transpor |
Chunghwa Telecom and BII Railway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chunghwa Telecom and BII Railway
The main advantage of trading using opposite Chunghwa Telecom and BII Railway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chunghwa Telecom position performs unexpectedly, BII Railway 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 BII Railway will offset losses from the drop in BII Railway's long position.| Chunghwa Telecom vs. Natural Health Trends | Chunghwa Telecom vs. SAFETY MEDICAL PROD | Chunghwa Telecom vs. Bumrungrad Hospital Public | Chunghwa Telecom vs. NAKED WINES PLC |
| BII Railway vs. FUJITSU LTD ADR | BII Railway vs. Superior Plus Corp | BII Railway vs. NMI Holdings | BII Railway vs. Origin Agritech |
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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