Correlation Between Nordic Semiconductor and Chunghwa Telecom
Can any of the company-specific risk be diversified away by investing in both Nordic Semiconductor 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 Nordic Semiconductor and Chunghwa Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nordic Semiconductor ASA and Chunghwa Telecom Co, you can compare the effects of market volatilities on Nordic Semiconductor 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 Nordic Semiconductor with a short position of Chunghwa Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Semiconductor and Chunghwa Telecom.
Diversification Opportunities for Nordic Semiconductor and Chunghwa Telecom
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nordic and Chunghwa is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Semiconductor ASA and Chunghwa Telecom Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chunghwa Telecom and Nordic Semiconductor 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 Nordic Semiconductor ASA 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 Nordic Semiconductor i.e., Nordic Semiconductor and Chunghwa Telecom go up and down completely randomly.
Pair Corralation between Nordic Semiconductor and Chunghwa Telecom
Assuming the 90 days horizon Nordic Semiconductor ASA is expected to generate 4.37 times more return on investment than Chunghwa Telecom. However, Nordic Semiconductor is 4.37 times more volatile than Chunghwa Telecom Co. It trades about 0.01 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 846.00 in Nordic Semiconductor ASA on August 26, 2024 and sell it today you would lose (45.00) from holding Nordic Semiconductor ASA or give up 5.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nordic Semiconductor ASA vs. Chunghwa Telecom Co
Performance |
| Timeline |
| Nordic Semiconductor ASA |
| Chunghwa Telecom |
Nordic Semiconductor and Chunghwa Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordic Semiconductor and Chunghwa Telecom
The main advantage of trading using opposite Nordic Semiconductor and Chunghwa Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordic Semiconductor 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.| Nordic Semiconductor vs. NVIDIA | Nordic Semiconductor vs. NVIDIA | Nordic Semiconductor vs. QUALCOMM Incorporated | Nordic Semiconductor vs. Advanced Micro Devices |
| Chunghwa Telecom vs. T Mobile | Chunghwa Telecom vs. ATT Inc | Chunghwa Telecom vs. Deutsche Telekom AG | Chunghwa Telecom vs. Nippon Telegraph and |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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