Correlation Between Chunghwa Telecom and SENECA FOODS-A
Can any of the company-specific risk be diversified away by investing in both Chunghwa Telecom and SENECA FOODS-A 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 SENECA FOODS-A 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 SENECA FOODS A, you can compare the effects of market volatilities on Chunghwa Telecom and SENECA FOODS-A 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 SENECA FOODS-A. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chunghwa Telecom and SENECA FOODS-A.
Diversification Opportunities for Chunghwa Telecom and SENECA FOODS-A
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Chunghwa and SENECA is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Chunghwa Telecom Co and SENECA FOODS A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SENECA FOODS A 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 SENECA FOODS-A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SENECA FOODS A has no effect on the direction of Chunghwa Telecom i.e., Chunghwa Telecom and SENECA FOODS-A go up and down completely randomly.
Pair Corralation between Chunghwa Telecom and SENECA FOODS-A
Assuming the 90 days trading horizon Chunghwa Telecom is expected to generate 5.54 times less return on investment than SENECA FOODS-A. But when comparing it to its historical volatility, Chunghwa Telecom Co is 3.55 times less risky than SENECA FOODS-A. It trades about 0.03 of its potential returns per unit of risk. SENECA FOODS A is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 4,660 in SENECA FOODS A on August 24, 2024 and sell it today you would earn a total of 1,990 from holding SENECA FOODS A or generate 42.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chunghwa Telecom Co vs. SENECA FOODS A
Performance |
| Timeline |
| Chunghwa Telecom |
| SENECA FOODS A |
Chunghwa Telecom and SENECA FOODS-A Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chunghwa Telecom and SENECA FOODS-A
The main advantage of trading using opposite Chunghwa Telecom and SENECA FOODS-A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chunghwa Telecom position performs unexpectedly, SENECA FOODS-A 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 SENECA FOODS-A will offset losses from the drop in SENECA FOODS-A'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 |
| SENECA FOODS-A vs. Chunghwa Telecom Co | SENECA FOODS-A vs. ScanSource | SENECA FOODS-A vs. Coor Service Management | SENECA FOODS-A vs. Cogent Communications Holdings |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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