Correlation Between Dow Jones and Chunghwa Telecom
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Chunghwa Telecom 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 Dow Jones and Chunghwa Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Chunghwa Telecom Co, you can compare the effects of market volatilities on Dow Jones and Chunghwa Telecom 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 Dow Jones with a short position of Chunghwa Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Chunghwa Telecom.
Diversification Opportunities for Dow Jones and Chunghwa Telecom
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dow and Chunghwa is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Chunghwa Telecom Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chunghwa Telecom and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with Chunghwa Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chunghwa Telecom has no effect on the direction of Dow Jones i.e., Dow Jones and Chunghwa Telecom go up and down completely randomly.
Pair Corralation between Dow Jones and Chunghwa Telecom
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.76 times more return on investment than Chunghwa Telecom. However, Dow Jones Industrial is 1.31 times less risky than Chunghwa Telecom. It trades about 0.09 of its potential returns per unit of risk. Chunghwa Telecom Co is currently generating about 0.07 per unit of risk. If you would invest 4,215,697 in Dow Jones Industrial on October 31, 2024 and sell it today you would earn a total of 255,655 from holding Dow Jones Industrial or generate 6.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.8% |
| Values | Daily Returns |
Dow Jones Industrial vs. Chunghwa Telecom Co
Performance |
| Timeline |
Dow Jones and Chunghwa Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Chunghwa Telecom Co
Pair trading matchups for Chunghwa Telecom
Pair Trading with Dow Jones and Chunghwa Telecom
The main advantage of trading using opposite Dow Jones and Chunghwa Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Chunghwa Telecom 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 Chunghwa Telecom will offset losses from the drop in Chunghwa Telecom's long position.| Dow Jones vs. WEC Energy Group | Dow Jones vs. Pure Cycle | Dow Jones vs. Tandy Leather Factory | Dow Jones vs. Tapestry |
| Chunghwa Telecom vs. ADRIATIC METALS LS 013355 | Chunghwa Telecom vs. GALENA MINING LTD | Chunghwa Telecom vs. GRIFFIN MINING LTD | Chunghwa Telecom vs. DATADOT TECHNOLOGY |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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