Correlation Between Chunghwa Telecom and Gentex
Can any of the company-specific risk be diversified away by investing in both Chunghwa Telecom and Gentex 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 Gentex 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 Gentex, you can compare the effects of market volatilities on Chunghwa Telecom and Gentex 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 Gentex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chunghwa Telecom and Gentex.
Diversification Opportunities for Chunghwa Telecom and Gentex
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Chunghwa and Gentex is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Chunghwa Telecom Co and Gentex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gentex 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 Gentex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gentex has no effect on the direction of Chunghwa Telecom i.e., Chunghwa Telecom and Gentex go up and down completely randomly.
Pair Corralation between Chunghwa Telecom and Gentex
Assuming the 90 days trading horizon Chunghwa Telecom is expected to generate 1.18 times less return on investment than Gentex. But when comparing it to its historical volatility, Chunghwa Telecom Co is 1.55 times less risky than Gentex. It trades about 0.03 of its potential returns per unit of risk. Gentex is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,428 in Gentex on October 29, 2024 and sell it today you would earn a total of 232.00 from holding Gentex or generate 9.56% 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. Gentex
Performance |
| Timeline |
| Chunghwa Telecom |
| Gentex |
Chunghwa Telecom and Gentex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chunghwa Telecom and Gentex
The main advantage of trading using opposite Chunghwa Telecom and Gentex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chunghwa Telecom position performs unexpectedly, Gentex 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 Gentex will offset losses from the drop in Gentex's long position.| Chunghwa Telecom vs. PLAY2CHILL SA ZY | Chunghwa Telecom vs. TRAVEL LEISURE DL 01 | Chunghwa Telecom vs. ITALIAN WINE BRANDS | Chunghwa Telecom vs. Zoom Video Communications |
| Gentex vs. Strategic Education | Gentex vs. ARDAGH METAL PACDL 0001 | Gentex vs. American Public Education | Gentex vs. Nippon Light Metal |
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.
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