Correlation Between GOLD ROAD and Chunghwa Telecom
Can any of the company-specific risk be diversified away by investing in both GOLD ROAD 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 GOLD ROAD and Chunghwa Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GOLD ROAD RES and Chunghwa Telecom Co, you can compare the effects of market volatilities on GOLD ROAD 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 GOLD ROAD with a short position of Chunghwa Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of GOLD ROAD and Chunghwa Telecom.
Diversification Opportunities for GOLD ROAD and Chunghwa Telecom
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GOLD and Chunghwa is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding GOLD ROAD RES and Chunghwa Telecom Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chunghwa Telecom and GOLD ROAD 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 GOLD ROAD RES 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 GOLD ROAD i.e., GOLD ROAD and Chunghwa Telecom go up and down completely randomly.
Pair Corralation between GOLD ROAD and Chunghwa Telecom
Assuming the 90 days trading horizon GOLD ROAD RES is expected to generate 3.25 times more return on investment than Chunghwa Telecom. However, GOLD ROAD is 3.25 times more volatile than Chunghwa Telecom Co. It trades about 0.05 of its potential returns per unit of risk. Chunghwa Telecom Co is currently generating about 0.03 per unit of risk. If you would invest 90.00 in GOLD ROAD RES on December 4, 2024 and sell it today you would earn a total of 55.00 from holding GOLD ROAD RES or generate 61.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
GOLD ROAD RES vs. Chunghwa Telecom Co
Performance |
| Timeline |
| GOLD ROAD RES |
| Chunghwa Telecom |
GOLD ROAD and Chunghwa Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GOLD ROAD and Chunghwa Telecom
The main advantage of trading using opposite GOLD ROAD and Chunghwa Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GOLD ROAD 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.| GOLD ROAD vs. DeVry Education Group | GOLD ROAD vs. ASURE SOFTWARE | GOLD ROAD vs. Adtalem Global Education | GOLD ROAD vs. GBS Software AG |
| Chunghwa Telecom vs. COREBRIDGE FINANCIAL INC | Chunghwa Telecom vs. Burlington Stores | Chunghwa Telecom vs. BRIT AMER TOBACCO | Chunghwa Telecom vs. FAST RETAIL ADR |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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