Correlation Between FIRST SHIP and Chunghwa Telecom
Can any of the company-specific risk be diversified away by investing in both FIRST SHIP 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 FIRST SHIP and Chunghwa Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FIRST SHIP LEASE and Chunghwa Telecom Co, you can compare the effects of market volatilities on FIRST SHIP 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 FIRST SHIP with a short position of Chunghwa Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of FIRST SHIP and Chunghwa Telecom.
Diversification Opportunities for FIRST SHIP and Chunghwa Telecom
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between FIRST and Chunghwa is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding FIRST SHIP LEASE and Chunghwa Telecom Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chunghwa Telecom and FIRST SHIP 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 FIRST SHIP LEASE 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 FIRST SHIP i.e., FIRST SHIP and Chunghwa Telecom go up and down completely randomly.
Pair Corralation between FIRST SHIP and Chunghwa Telecom
Assuming the 90 days horizon FIRST SHIP LEASE is expected to generate 4.66 times more return on investment than Chunghwa Telecom. However, FIRST SHIP is 4.66 times more volatile than Chunghwa Telecom Co. It trades about 0.11 of its potential returns per unit of risk. Chunghwa Telecom Co is currently generating about 0.05 per unit of risk. If you would invest 2.04 in FIRST SHIP LEASE on October 19, 2024 and sell it today you would earn a total of 0.23 from holding FIRST SHIP LEASE or generate 11.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FIRST SHIP LEASE vs. Chunghwa Telecom Co
Performance |
| Timeline |
| FIRST SHIP LEASE |
| Chunghwa Telecom |
FIRST SHIP and Chunghwa Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FIRST SHIP and Chunghwa Telecom
The main advantage of trading using opposite FIRST SHIP and Chunghwa Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FIRST SHIP 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.| FIRST SHIP vs. CAIRN HOMES EO | FIRST SHIP vs. Nomad Foods | FIRST SHIP vs. OFFICE DEPOT | FIRST SHIP vs. INVITATION HOMES DL |
| Chunghwa Telecom vs. ELECTRONIC ARTS | Chunghwa Telecom vs. Electronic Arts | Chunghwa Telecom vs. Commercial Vehicle Group | Chunghwa Telecom vs. FIRST SHIP LEASE |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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