Correlation Between Chunghwa Telecom and Deutsche Telekom
Can any of the company-specific risk be diversified away by investing in both Chunghwa Telecom and Deutsche Telekom 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 Deutsche Telekom 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 Deutsche Telekom AG, you can compare the effects of market volatilities on Chunghwa Telecom and Deutsche Telekom 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 Deutsche Telekom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chunghwa Telecom and Deutsche Telekom.
Diversification Opportunities for Chunghwa Telecom and Deutsche Telekom
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Chunghwa and Deutsche is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Chunghwa Telecom Co and Deutsche Telekom AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Telekom 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 Deutsche Telekom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Telekom has no effect on the direction of Chunghwa Telecom i.e., Chunghwa Telecom and Deutsche Telekom go up and down completely randomly.
Pair Corralation between Chunghwa Telecom and Deutsche Telekom
Assuming the 90 days trading horizon Chunghwa Telecom is expected to generate 5.0 times less return on investment than Deutsche Telekom. In addition to that, Chunghwa Telecom is 1.08 times more volatile than Deutsche Telekom AG. It trades about 0.03 of its total potential returns per unit of risk. Deutsche Telekom AG is currently generating about 0.15 per unit of volatility. If you would invest 1,923 in Deutsche Telekom AG on October 19, 2024 and sell it today you would earn a total of 1,108 from holding Deutsche Telekom AG or generate 57.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.75% |
| Values | Daily Returns |
Chunghwa Telecom Co vs. Deutsche Telekom AG
Performance |
| Timeline |
| Chunghwa Telecom |
| Deutsche Telekom |
Chunghwa Telecom and Deutsche Telekom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chunghwa Telecom and Deutsche Telekom
The main advantage of trading using opposite Chunghwa Telecom and Deutsche Telekom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chunghwa Telecom position performs unexpectedly, Deutsche Telekom 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 Deutsche Telekom will offset losses from the drop in Deutsche Telekom's long position.| Chunghwa Telecom vs. ELECTRONIC ARTS | Chunghwa Telecom vs. Electronic Arts | Chunghwa Telecom vs. Commercial Vehicle Group | Chunghwa Telecom vs. FIRST SHIP LEASE |
| Deutsche Telekom vs. Perseus Mining Limited | Deutsche Telekom vs. Jacquet Metal Service | Deutsche Telekom vs. Granite Construction | Deutsche Telekom vs. North American Construction |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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