Correlation Between Chunghwa Telecom and BW OFFSHORE
Can any of the company-specific risk be diversified away by investing in both Chunghwa Telecom and BW 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 BW 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 BW OFFSHORE LTD, you can compare the effects of market volatilities on Chunghwa Telecom and BW 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 BW OFFSHORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chunghwa Telecom and BW OFFSHORE.
Diversification Opportunities for Chunghwa Telecom and BW OFFSHORE
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Chunghwa and XY81 is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Chunghwa Telecom Co and BW OFFSHORE LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW OFFSHORE LTD 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 BW OFFSHORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BW OFFSHORE LTD has no effect on the direction of Chunghwa Telecom i.e., Chunghwa Telecom and BW OFFSHORE go up and down completely randomly.
Pair Corralation between Chunghwa Telecom and BW OFFSHORE
Assuming the 90 days trading horizon Chunghwa Telecom Co is expected to generate 0.45 times more return on investment than BW OFFSHORE. However, Chunghwa Telecom Co is 2.24 times less risky than BW OFFSHORE. It trades about 0.19 of its potential returns per unit of risk. BW OFFSHORE LTD is currently generating about 0.06 per unit of risk. If you would invest 3,580 in Chunghwa Telecom Co on November 8, 2024 and sell it today you would earn a total of 140.00 from holding Chunghwa Telecom Co or generate 3.91% 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. BW OFFSHORE LTD
Performance |
| Timeline |
| Chunghwa Telecom |
| BW OFFSHORE LTD |
Chunghwa Telecom and BW OFFSHORE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chunghwa Telecom and BW OFFSHORE
The main advantage of trading using opposite Chunghwa Telecom and BW OFFSHORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chunghwa Telecom position performs unexpectedly, BW 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 BW OFFSHORE will offset losses from the drop in BW OFFSHORE's long position.| Chunghwa Telecom vs. EMBARK EDUCATION LTD | Chunghwa Telecom vs. HEALTHSTREAM | Chunghwa Telecom vs. Mitsui Chemicals | Chunghwa Telecom vs. IDP EDUCATION LTD |
| BW OFFSHORE vs. Nucletron Electronic Aktiengesellschaft | BW OFFSHORE vs. ELECTRONIC ARTS | BW OFFSHORE vs. RETAIL FOOD GROUP | BW OFFSHORE vs. Richardson Electronics |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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