Correlation Between Chunghwa Telecom and GRIFFIN MINING
Can any of the company-specific risk be diversified away by investing in both Chunghwa Telecom and GRIFFIN MINING 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 GRIFFIN MINING 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 GRIFFIN MINING LTD, you can compare the effects of market volatilities on Chunghwa Telecom and GRIFFIN MINING 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 GRIFFIN MINING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chunghwa Telecom and GRIFFIN MINING.
Diversification Opportunities for Chunghwa Telecom and GRIFFIN MINING
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Chunghwa and GRIFFIN is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Chunghwa Telecom Co and GRIFFIN MINING LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GRIFFIN MINING LTD 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 GRIFFIN MINING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GRIFFIN MINING LTD has no effect on the direction of Chunghwa Telecom i.e., Chunghwa Telecom and GRIFFIN MINING go up and down completely randomly.
Pair Corralation between Chunghwa Telecom and GRIFFIN MINING
Assuming the 90 days trading horizon Chunghwa Telecom Co is expected to generate 0.74 times more return on investment than GRIFFIN MINING. However, Chunghwa Telecom Co is 1.35 times less risky than GRIFFIN MINING. It trades about 0.12 of its potential returns per unit of risk. GRIFFIN MINING LTD is currently generating about -0.05 per unit of risk. If you would invest 3,480 in Chunghwa Telecom Co on August 28, 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 Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chunghwa Telecom Co vs. GRIFFIN MINING LTD
Performance |
| Timeline |
| Chunghwa Telecom |
| GRIFFIN MINING LTD |
Chunghwa Telecom and GRIFFIN MINING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chunghwa Telecom and GRIFFIN MINING
The main advantage of trading using opposite Chunghwa Telecom and GRIFFIN MINING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chunghwa Telecom position performs unexpectedly, GRIFFIN MINING 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 GRIFFIN MINING will offset losses from the drop in GRIFFIN MINING's long position.The idea behind Chunghwa Telecom Co and GRIFFIN MINING LTD pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| GRIFFIN MINING vs. Apple Inc | GRIFFIN MINING vs. Apple Inc | GRIFFIN MINING vs. Apple Inc | GRIFFIN MINING vs. Apple Inc |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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