Correlation Between Chunghwa Telecom and BANK MANDIRI
Can any of the company-specific risk be diversified away by investing in both Chunghwa Telecom and BANK MANDIRI 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 BANK MANDIRI 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 BANK MANDIRI, you can compare the effects of market volatilities on Chunghwa Telecom and BANK MANDIRI 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 BANK MANDIRI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chunghwa Telecom and BANK MANDIRI.
Diversification Opportunities for Chunghwa Telecom and BANK MANDIRI
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chunghwa and BANK is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Chunghwa Telecom Co and BANK MANDIRI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK MANDIRI 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 BANK MANDIRI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANK MANDIRI has no effect on the direction of Chunghwa Telecom i.e., Chunghwa Telecom and BANK MANDIRI go up and down completely randomly.
Pair Corralation between Chunghwa Telecom and BANK MANDIRI
Assuming the 90 days trading horizon Chunghwa Telecom is expected to generate 3.29 times less return on investment than BANK MANDIRI. But when comparing it to its historical volatility, Chunghwa Telecom Co is 4.34 times less risky than BANK MANDIRI. It trades about 0.04 of its potential returns per unit of risk. BANK MANDIRI is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 29.00 in BANK MANDIRI on August 29, 2024 and sell it today you would earn a total of 5.00 from holding BANK MANDIRI or generate 17.24% 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. BANK MANDIRI
Performance |
| Timeline |
| Chunghwa Telecom |
| BANK MANDIRI |
Chunghwa Telecom and BANK MANDIRI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chunghwa Telecom and BANK MANDIRI
The main advantage of trading using opposite Chunghwa Telecom and BANK MANDIRI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chunghwa Telecom position performs unexpectedly, BANK MANDIRI 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 BANK MANDIRI will offset losses from the drop in BANK MANDIRI's long position.The idea behind Chunghwa Telecom Co and BANK MANDIRI pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| BANK MANDIRI vs. Fast Retailing Co | BANK MANDIRI vs. Vastned Retail NV | BANK MANDIRI vs. Globe Trade Centre | BANK MANDIRI vs. United Breweries Co |
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
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |