Correlation Between Chunghwa Telecom and Nintendo
Can any of the company-specific risk be diversified away by investing in both Chunghwa Telecom and Nintendo 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 Nintendo 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 Nintendo Co, you can compare the effects of market volatilities on Chunghwa Telecom and Nintendo 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 Nintendo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chunghwa Telecom and Nintendo.
Diversification Opportunities for Chunghwa Telecom and Nintendo
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chunghwa and Nintendo is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Chunghwa Telecom Co and Nintendo Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nintendo 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 Nintendo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nintendo has no effect on the direction of Chunghwa Telecom i.e., Chunghwa Telecom and Nintendo go up and down completely randomly.
Pair Corralation between Chunghwa Telecom and Nintendo
Assuming the 90 days trading horizon Chunghwa Telecom is expected to generate 4.65 times less return on investment than Nintendo. But when comparing it to its historical volatility, Chunghwa Telecom Co is 2.42 times less risky than Nintendo. It trades about 0.18 of its potential returns per unit of risk. Nintendo Co is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 5,074 in Nintendo Co on September 12, 2024 and sell it today you would earn a total of 700.00 from holding Nintendo Co or generate 13.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chunghwa Telecom Co vs. Nintendo Co
Performance |
| Timeline |
| Chunghwa Telecom |
| Nintendo |
Chunghwa Telecom and Nintendo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chunghwa Telecom and Nintendo
The main advantage of trading using opposite Chunghwa Telecom and Nintendo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chunghwa Telecom position performs unexpectedly, Nintendo 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 Nintendo will offset losses from the drop in Nintendo's long position.| Chunghwa Telecom vs. Superior Plus Corp | Chunghwa Telecom vs. SIVERS SEMICONDUCTORS AB | Chunghwa Telecom vs. Norsk Hydro ASA | Chunghwa Telecom vs. Reliance Steel Aluminum |
| Nintendo vs. Hyrican Informationssysteme Aktiengesellschaft | Nintendo vs. MICRONIC MYDATA | Nintendo vs. INFORMATION SVC GRP | Nintendo vs. Datang International Power |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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