Correlation Between Chunghwa Telecom and Harmony Gold
Can any of the company-specific risk be diversified away by investing in both Chunghwa Telecom and Harmony Gold 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 Harmony Gold 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 Harmony Gold Mining, you can compare the effects of market volatilities on Chunghwa Telecom and Harmony Gold 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 Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chunghwa Telecom and Harmony Gold.
Diversification Opportunities for Chunghwa Telecom and Harmony Gold
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Chunghwa and Harmony is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Chunghwa Telecom Co and Harmony Gold Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harmony Gold Mining 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 Harmony Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harmony Gold Mining has no effect on the direction of Chunghwa Telecom i.e., Chunghwa Telecom and Harmony Gold go up and down completely randomly.
Pair Corralation between Chunghwa Telecom and Harmony Gold
Assuming the 90 days trading horizon Chunghwa Telecom Co is expected to under-perform the Harmony Gold. But the stock apears to be less risky and, when comparing its historical volatility, Chunghwa Telecom Co is 3.71 times less risky than Harmony Gold. The stock trades about -0.04 of its potential returns per unit of risk. The Harmony Gold Mining is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 795.00 in Harmony Gold Mining on October 20, 2024 and sell it today you would earn a total of 150.00 from holding Harmony Gold Mining or generate 18.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chunghwa Telecom Co vs. Harmony Gold Mining
Performance |
| Timeline |
| Chunghwa Telecom |
| Harmony Gold Mining |
Chunghwa Telecom and Harmony Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chunghwa Telecom and Harmony Gold
The main advantage of trading using opposite Chunghwa Telecom and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chunghwa Telecom position performs unexpectedly, Harmony Gold 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 Harmony Gold will offset losses from the drop in Harmony Gold's long position.| Chunghwa Telecom vs. Salesforce | Chunghwa Telecom vs. Gruppo Mutuionline SpA | Chunghwa Telecom vs. SENECA FOODS A | Chunghwa Telecom vs. Performance Food Group |
| Harmony Gold vs. Soken Chemical Engineering | Harmony Gold vs. Amkor Technology | Harmony Gold vs. Siamgas And Petrochemicals | Harmony Gold vs. BioNTech SE |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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