Correlation Between Thoresen Thai and Chunghwa Telecom
Can any of the company-specific risk be diversified away by investing in both Thoresen Thai 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 Thoresen Thai and Chunghwa Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thoresen Thai Agencies and Chunghwa Telecom Co, you can compare the effects of market volatilities on Thoresen Thai 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 Thoresen Thai with a short position of Chunghwa Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thoresen Thai and Chunghwa Telecom.
Diversification Opportunities for Thoresen Thai and Chunghwa Telecom
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Thoresen and Chunghwa is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Thoresen Thai Agencies and Chunghwa Telecom Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chunghwa Telecom and Thoresen Thai 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 Thoresen Thai Agencies 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 Thoresen Thai i.e., Thoresen Thai and Chunghwa Telecom go up and down completely randomly.
Pair Corralation between Thoresen Thai and Chunghwa Telecom
Assuming the 90 days trading horizon Thoresen Thai Agencies is expected to under-perform the Chunghwa Telecom. In addition to that, Thoresen Thai is 4.6 times more volatile than Chunghwa Telecom Co. It trades about -0.01 of its total potential returns per unit of risk. Chunghwa Telecom Co is currently generating about 0.03 per unit of volatility. If you would invest 3,200 in Chunghwa Telecom Co on October 1, 2024 and sell it today you would earn a total of 420.00 from holding Chunghwa Telecom Co or generate 13.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thoresen Thai Agencies vs. Chunghwa Telecom Co
Performance |
| Timeline |
| Thoresen Thai Agencies |
| Chunghwa Telecom |
Thoresen Thai and Chunghwa Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thoresen Thai and Chunghwa Telecom
The main advantage of trading using opposite Thoresen Thai and Chunghwa Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thoresen Thai 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.| Thoresen Thai vs. Strategic Investments AS | Thoresen Thai vs. Gladstone Investment | Thoresen Thai vs. AM EAGLE OUTFITTERS | Thoresen Thai vs. MOLSON RS BEVERAGE |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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