Correlation Between Chunghwa Telecom and Highlight Communications
Can any of the company-specific risk be diversified away by investing in both Chunghwa Telecom and Highlight Communications 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 Highlight Communications 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 Highlight Communications AG, you can compare the effects of market volatilities on Chunghwa Telecom and Highlight Communications 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 Highlight Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chunghwa Telecom and Highlight Communications.
Diversification Opportunities for Chunghwa Telecom and Highlight Communications
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Chunghwa and Highlight is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Chunghwa Telecom Co and Highlight Communications AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highlight Communications 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 Highlight Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highlight Communications has no effect on the direction of Chunghwa Telecom i.e., Chunghwa Telecom and Highlight Communications go up and down completely randomly.
Pair Corralation between Chunghwa Telecom and Highlight Communications
Assuming the 90 days trading horizon Chunghwa Telecom Co is expected to generate 0.3 times more return on investment than Highlight Communications. However, Chunghwa Telecom Co is 3.37 times less risky than Highlight Communications. It trades about 0.04 of its potential returns per unit of risk. Highlight Communications AG is currently generating about -0.12 per unit of risk. If you would invest 3,433 in Chunghwa Telecom Co on September 2, 2024 and sell it today you would earn a total of 167.00 from holding Chunghwa Telecom Co or generate 4.86% 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. Highlight Communications AG
Performance |
| Timeline |
| Chunghwa Telecom |
| Highlight Communications |
Chunghwa Telecom and Highlight Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chunghwa Telecom and Highlight Communications
The main advantage of trading using opposite Chunghwa Telecom and Highlight Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chunghwa Telecom position performs unexpectedly, Highlight Communications 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 Highlight Communications will offset losses from the drop in Highlight Communications' long position.| Chunghwa Telecom vs. Deutsche Telekom AG | Chunghwa Telecom vs. Superior Plus Corp | Chunghwa Telecom vs. NMI Holdings | Chunghwa Telecom vs. Origin Agritech |
| Highlight Communications vs. Netflix | Highlight Communications vs. Warner Music Group | Highlight Communications vs. Superior Plus Corp | Highlight Communications vs. NMI Holdings |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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