Correlation Between Chunghwa Telecom and X-FAB Silicon
Can any of the company-specific risk be diversified away by investing in both Chunghwa Telecom and X-FAB Silicon 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 X-FAB Silicon 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 X FAB Silicon Foundries, you can compare the effects of market volatilities on Chunghwa Telecom and X-FAB Silicon 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 X-FAB Silicon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chunghwa Telecom and X-FAB Silicon.
Diversification Opportunities for Chunghwa Telecom and X-FAB Silicon
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chunghwa and X-FAB is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Chunghwa Telecom Co and X FAB Silicon Foundries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X FAB Silicon 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 X-FAB Silicon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X FAB Silicon has no effect on the direction of Chunghwa Telecom i.e., Chunghwa Telecom and X-FAB Silicon go up and down completely randomly.
Pair Corralation between Chunghwa Telecom and X-FAB Silicon
Assuming the 90 days trading horizon Chunghwa Telecom Co is expected to generate 0.31 times more return on investment than X-FAB Silicon. However, Chunghwa Telecom Co is 3.19 times less risky than X-FAB Silicon. It trades about 0.05 of its potential returns per unit of risk. X FAB Silicon Foundries is currently generating about -0.12 per unit of risk. If you would invest 3,460 in Chunghwa Telecom Co on August 25, 2024 and sell it today you would earn a total of 100.00 from holding Chunghwa Telecom Co or generate 2.89% 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. X FAB Silicon Foundries
Performance |
| Timeline |
| Chunghwa Telecom |
| X FAB Silicon |
Chunghwa Telecom and X-FAB Silicon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chunghwa Telecom and X-FAB Silicon
The main advantage of trading using opposite Chunghwa Telecom and X-FAB Silicon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chunghwa Telecom position performs unexpectedly, X-FAB Silicon 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 X-FAB Silicon will offset losses from the drop in X-FAB Silicon's long position.| Chunghwa Telecom vs. T Mobile | Chunghwa Telecom vs. ATT Inc | Chunghwa Telecom vs. Deutsche Telekom AG | Chunghwa Telecom vs. Nippon Telegraph and |
| X-FAB Silicon vs. Apple Inc | X-FAB Silicon vs. Apple Inc | X-FAB Silicon vs. Apple Inc | X-FAB Silicon vs. Apple Inc |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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