Correlation Between Chunghwa Telecom and Singapore Telecommunicatio
Can any of the company-specific risk be diversified away by investing in both Chunghwa Telecom and Singapore Telecommunicatio 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 Singapore Telecommunicatio 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 Singapore Telecommunications Limited, you can compare the effects of market volatilities on Chunghwa Telecom and Singapore Telecommunicatio 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 Singapore Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chunghwa Telecom and Singapore Telecommunicatio.
Diversification Opportunities for Chunghwa Telecom and Singapore Telecommunicatio
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Chunghwa and Singapore is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Chunghwa Telecom Co and Singapore Telecommunications L in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Telecommunicatio 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 Singapore Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singapore Telecommunicatio has no effect on the direction of Chunghwa Telecom i.e., Chunghwa Telecom and Singapore Telecommunicatio go up and down completely randomly.
Pair Corralation between Chunghwa Telecom and Singapore Telecommunicatio
Assuming the 90 days trading horizon Chunghwa Telecom is expected to generate 1.16 times less return on investment than Singapore Telecommunicatio. But when comparing it to its historical volatility, Chunghwa Telecom Co is 1.34 times less risky than Singapore Telecommunicatio. It trades about 0.15 of its potential returns per unit of risk. Singapore Telecommunications Limited is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 209.00 in Singapore Telecommunications Limited on September 2, 2024 and sell it today you would earn a total of 11.00 from holding Singapore Telecommunications Limited or generate 5.26% 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. Singapore Telecommunications L
Performance |
| Timeline |
| Chunghwa Telecom |
| Singapore Telecommunicatio |
Chunghwa Telecom and Singapore Telecommunicatio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chunghwa Telecom and Singapore Telecommunicatio
The main advantage of trading using opposite Chunghwa Telecom and Singapore Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chunghwa Telecom position performs unexpectedly, Singapore Telecommunicatio 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 Singapore Telecommunicatio will offset losses from the drop in Singapore Telecommunicatio's long position.| Chunghwa Telecom vs. Deutsche Telekom AG | Chunghwa Telecom vs. Superior Plus Corp | Chunghwa Telecom vs. NMI Holdings | Chunghwa Telecom vs. Origin Agritech |
| Singapore Telecommunicatio vs. LGI Homes | Singapore Telecommunicatio vs. DATAGROUP SE | Singapore Telecommunicatio vs. Science Applications International | Singapore Telecommunicatio vs. HomeToGo 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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