Correlation Between Chunghwa Telecom and Solstad Offshore
Can any of the company-specific risk be diversified away by investing in both Chunghwa Telecom and Solstad Offshore 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 Solstad Offshore 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 Solstad Offshore ASA, you can compare the effects of market volatilities on Chunghwa Telecom and Solstad Offshore 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 Solstad Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chunghwa Telecom and Solstad Offshore.
Diversification Opportunities for Chunghwa Telecom and Solstad Offshore
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Chunghwa and Solstad is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Chunghwa Telecom Co and Solstad Offshore ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solstad Offshore ASA 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 Solstad Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solstad Offshore ASA has no effect on the direction of Chunghwa Telecom i.e., Chunghwa Telecom and Solstad Offshore go up and down completely randomly.
Pair Corralation between Chunghwa Telecom and Solstad Offshore
Assuming the 90 days trading horizon Chunghwa Telecom is expected to generate 2.08 times less return on investment than Solstad Offshore. But when comparing it to its historical volatility, Chunghwa Telecom Co is 3.16 times less risky than Solstad Offshore. It trades about 0.04 of its potential returns per unit of risk. Solstad Offshore ASA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 337.00 in Solstad Offshore ASA on September 3, 2024 and sell it today you would earn a total of 12.00 from holding Solstad Offshore ASA or generate 3.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chunghwa Telecom Co vs. Solstad Offshore ASA
Performance |
| Timeline |
| Chunghwa Telecom |
| Solstad Offshore ASA |
Chunghwa Telecom and Solstad Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chunghwa Telecom and Solstad Offshore
The main advantage of trading using opposite Chunghwa Telecom and Solstad Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chunghwa Telecom position performs unexpectedly, Solstad Offshore 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 Solstad Offshore will offset losses from the drop in Solstad Offshore's long position.| Chunghwa Telecom vs. INTERSHOP Communications Aktiengesellschaft | Chunghwa Telecom vs. Aozora Bank | Chunghwa Telecom vs. Solstad Offshore ASA | Chunghwa Telecom vs. BANKINTER ADR 2007 |
| Solstad Offshore vs. Liberty Broadband | Solstad Offshore vs. CHINA EDUCATION GROUP | Solstad Offshore vs. BROADSTNET LEADL 00025 | Solstad Offshore vs. EEDUCATION ALBERT AB |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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