Correlation Between Chunghwa Telecom and FARM 51
Can any of the company-specific risk be diversified away by investing in both Chunghwa Telecom and FARM 51 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 FARM 51 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 FARM 51 GROUP, you can compare the effects of market volatilities on Chunghwa Telecom and FARM 51 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 FARM 51. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chunghwa Telecom and FARM 51.
Diversification Opportunities for Chunghwa Telecom and FARM 51
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Chunghwa and FARM is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Chunghwa Telecom Co and FARM 51 GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FARM 51 GROUP 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 FARM 51. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FARM 51 GROUP has no effect on the direction of Chunghwa Telecom i.e., Chunghwa Telecom and FARM 51 go up and down completely randomly.
Pair Corralation between Chunghwa Telecom and FARM 51
Assuming the 90 days trading horizon Chunghwa Telecom is expected to generate 3.74 times less return on investment than FARM 51. But when comparing it to its historical volatility, Chunghwa Telecom Co is 3.11 times less risky than FARM 51. It trades about 0.16 of its potential returns per unit of risk. FARM 51 GROUP is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 290.00 in FARM 51 GROUP on November 7, 2024 and sell it today you would earn a total of 36.00 from holding FARM 51 GROUP or generate 12.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chunghwa Telecom Co vs. FARM 51 GROUP
Performance |
| Timeline |
| Chunghwa Telecom |
| FARM 51 GROUP |
Chunghwa Telecom and FARM 51 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chunghwa Telecom and FARM 51
The main advantage of trading using opposite Chunghwa Telecom and FARM 51 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chunghwa Telecom position performs unexpectedly, FARM 51 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 FARM 51 will offset losses from the drop in FARM 51's long position.| Chunghwa Telecom vs. GOME Retail Holdings | Chunghwa Telecom vs. PICKN PAY STORES | Chunghwa Telecom vs. H2O Retailing | Chunghwa Telecom vs. CENTURIA OFFICE REIT |
| FARM 51 vs. Suntory Beverage Food | FARM 51 vs. United Breweries Co | FARM 51 vs. International Consolidated Airlines | FARM 51 vs. United Airlines Holdings |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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