Correlation Between Chunghwa Telecom and Orange SA
Can any of the company-specific risk be diversified away by investing in both Chunghwa Telecom and Orange SA 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 Orange SA 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 Orange SA, you can compare the effects of market volatilities on Chunghwa Telecom and Orange SA 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 Orange SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chunghwa Telecom and Orange SA.
Diversification Opportunities for Chunghwa Telecom and Orange SA
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Chunghwa and Orange is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Chunghwa Telecom Co and Orange SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orange SA 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 Orange SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orange SA has no effect on the direction of Chunghwa Telecom i.e., Chunghwa Telecom and Orange SA go up and down completely randomly.
Pair Corralation between Chunghwa Telecom and Orange SA
Assuming the 90 days trading horizon Chunghwa Telecom Co is expected to generate 1.59 times more return on investment than Orange SA. However, Chunghwa Telecom is 1.59 times more volatile than Orange SA. It trades about 0.11 of its potential returns per unit of risk. Orange SA is currently generating about 0.03 per unit of risk. If you would invest 3,480 in Chunghwa Telecom Co on August 31, 2024 and sell it today you would earn a total of 120.00 from holding Chunghwa Telecom Co or generate 3.45% 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. Orange SA
Performance |
| Timeline |
| Chunghwa Telecom |
| Orange SA |
Chunghwa Telecom and Orange SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chunghwa Telecom and Orange SA
The main advantage of trading using opposite Chunghwa Telecom and Orange SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chunghwa Telecom position performs unexpectedly, Orange SA 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 Orange SA will offset losses from the drop in Orange SA's long position.| Chunghwa Telecom vs. Marie Brizard Wine | Chunghwa Telecom vs. Perseus Mining Limited | Chunghwa Telecom vs. Nordic Semiconductor ASA | Chunghwa Telecom vs. GALENA MINING LTD |
| Orange SA vs. Digilife Technologies Limited | Orange SA vs. Uber Technologies | Orange SA vs. GLG LIFE TECH | Orange SA vs. MAGIC SOFTWARE ENTR |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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