Correlation Between Chunghwa Telecom and Granite Construction
Can any of the company-specific risk be diversified away by investing in both Chunghwa Telecom and Granite Construction 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 Granite Construction 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 Granite Construction, you can compare the effects of market volatilities on Chunghwa Telecom and Granite Construction 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 Granite Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chunghwa Telecom and Granite Construction.
Diversification Opportunities for Chunghwa Telecom and Granite Construction
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chunghwa and Granite is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Chunghwa Telecom Co and Granite Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Granite Construction 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 Granite Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Granite Construction has no effect on the direction of Chunghwa Telecom i.e., Chunghwa Telecom and Granite Construction go up and down completely randomly.
Pair Corralation between Chunghwa Telecom and Granite Construction
Assuming the 90 days trading horizon Chunghwa Telecom Co is expected to generate 0.49 times more return on investment than Granite Construction. However, Chunghwa Telecom Co is 2.03 times less risky than Granite Construction. It trades about -0.1 of its potential returns per unit of risk. Granite Construction is currently generating about -0.25 per unit of risk. If you would invest 3,620 in Chunghwa Telecom Co on October 11, 2024 and sell it today you would lose (40.00) from holding Chunghwa Telecom Co or give up 1.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chunghwa Telecom Co vs. Granite Construction
Performance |
| Timeline |
| Chunghwa Telecom |
| Granite Construction |
Chunghwa Telecom and Granite Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chunghwa Telecom and Granite Construction
The main advantage of trading using opposite Chunghwa Telecom and Granite Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chunghwa Telecom position performs unexpectedly, Granite Construction 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 Granite Construction will offset losses from the drop in Granite Construction's long position.| Chunghwa Telecom vs. PEPTONIC MEDICAL | Chunghwa Telecom vs. Genertec Universal Medical | Chunghwa Telecom vs. PLAYWAY SA ZY 10 | Chunghwa Telecom vs. Merit Medical Systems |
| Granite Construction vs. Chunghwa Telecom Co | Granite Construction vs. Meiko Electronics Co | Granite Construction vs. KIMBALL ELECTRONICS | Granite Construction vs. CITIC Telecom International |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities |