Correlation Between Performance Food and Chunghwa Telecom
Can any of the company-specific risk be diversified away by investing in both Performance Food 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 Performance Food and Chunghwa Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Performance Food Group and Chunghwa Telecom Co, you can compare the effects of market volatilities on Performance Food 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 Performance Food with a short position of Chunghwa Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Performance Food and Chunghwa Telecom.
Diversification Opportunities for Performance Food and Chunghwa Telecom
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Performance and Chunghwa is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Performance Food Group and Chunghwa Telecom Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chunghwa Telecom and Performance Food 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 Performance Food Group 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 Performance Food i.e., Performance Food and Chunghwa Telecom go up and down completely randomly.
Pair Corralation between Performance Food and Chunghwa Telecom
Assuming the 90 days trading horizon Performance Food Group is expected to generate 1.64 times more return on investment than Chunghwa Telecom. However, Performance Food is 1.64 times more volatile than Chunghwa Telecom Co. It trades about 0.13 of its potential returns per unit of risk. Chunghwa Telecom Co is currently generating about 0.02 per unit of risk. If you would invest 6,250 in Performance Food Group on September 19, 2024 and sell it today you would earn a total of 1,950 from holding Performance Food Group or generate 31.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Performance Food Group vs. Chunghwa Telecom Co
Performance |
| Timeline |
| Performance Food |
| Chunghwa Telecom |
Performance Food and Chunghwa Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Performance Food and Chunghwa Telecom
The main advantage of trading using opposite Performance Food and Chunghwa Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Performance Food 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.| Performance Food vs. Apple Inc | Performance Food vs. Apple Inc | Performance Food vs. Apple Inc | Performance Food vs. Apple Inc |
| Chunghwa Telecom vs. Burlington Stores | Chunghwa Telecom vs. Astral Foods Limited | Chunghwa Telecom vs. CN MODERN DAIRY | Chunghwa Telecom vs. Performance Food Group |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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