Correlation Between KINGBOARD CHEMICAL and Chunghwa Telecom
Can any of the company-specific risk be diversified away by investing in both KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL and Chunghwa Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KINGBOARD CHEMICAL and Chunghwa Telecom Co, you can compare the effects of market volatilities on KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL with a short position of Chunghwa Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of KINGBOARD CHEMICAL and Chunghwa Telecom.
Diversification Opportunities for KINGBOARD CHEMICAL and Chunghwa Telecom
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between KINGBOARD and Chunghwa is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding KINGBOARD CHEMICAL and Chunghwa Telecom Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chunghwa Telecom and KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL i.e., KINGBOARD CHEMICAL and Chunghwa Telecom go up and down completely randomly.
Pair Corralation between KINGBOARD CHEMICAL and Chunghwa Telecom
Assuming the 90 days trading horizon KINGBOARD CHEMICAL is expected to generate 3.18 times more return on investment than Chunghwa Telecom. However, KINGBOARD CHEMICAL is 3.18 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 0.04 per unit of risk. If you would invest 197.00 in KINGBOARD CHEMICAL on September 3, 2024 and sell it today you would earn a total of 27.00 from holding KINGBOARD CHEMICAL or generate 13.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KINGBOARD CHEMICAL vs. Chunghwa Telecom Co
Performance |
| Timeline |
| KINGBOARD CHEMICAL |
| Chunghwa Telecom |
KINGBOARD CHEMICAL and Chunghwa Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KINGBOARD CHEMICAL and Chunghwa Telecom
The main advantage of trading using opposite KINGBOARD CHEMICAL and Chunghwa Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KINGBOARD CHEMICAL 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.| KINGBOARD CHEMICAL vs. TOTAL GABON | KINGBOARD CHEMICAL vs. Walgreens Boots Alliance | KINGBOARD CHEMICAL vs. Peak Resources Limited |
| Chunghwa Telecom vs. INTERSHOP Communications Aktiengesellschaft | Chunghwa Telecom vs. Aozora Bank | Chunghwa Telecom vs. Solstad Offshore ASA | Chunghwa Telecom vs. BANKINTER ADR 2007 |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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