Correlation Between Reinsurance Group and Chunghwa Telecom
Can any of the company-specific risk be diversified away by investing in both Reinsurance Group 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 Reinsurance Group and Chunghwa Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Reinsurance Group of and Chunghwa Telecom Co, you can compare the effects of market volatilities on Reinsurance Group 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 Reinsurance Group with a short position of Chunghwa Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reinsurance Group and Chunghwa Telecom.
Diversification Opportunities for Reinsurance Group and Chunghwa Telecom
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Reinsurance and Chunghwa is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Reinsurance Group of and Chunghwa Telecom Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chunghwa Telecom and Reinsurance Group 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 Reinsurance Group of 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 Reinsurance Group i.e., Reinsurance Group and Chunghwa Telecom go up and down completely randomly.
Pair Corralation between Reinsurance Group and Chunghwa Telecom
Assuming the 90 days trading horizon Reinsurance Group of is expected to generate 2.07 times more return on investment than Chunghwa Telecom. However, Reinsurance Group is 2.07 times more volatile than Chunghwa Telecom Co. It trades about 0.16 of its potential returns per unit of risk. Chunghwa Telecom Co is currently generating about 0.15 per unit of risk. If you would invest 19,614 in Reinsurance Group of on September 1, 2024 and sell it today you would earn a total of 1,986 from holding Reinsurance Group of or generate 10.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Reinsurance Group of vs. Chunghwa Telecom Co
Performance |
| Timeline |
| Reinsurance Group |
| Chunghwa Telecom |
Reinsurance Group and Chunghwa Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reinsurance Group and Chunghwa Telecom
The main advantage of trading using opposite Reinsurance Group and Chunghwa Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reinsurance Group 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.| Reinsurance Group vs. Superior Plus Corp | Reinsurance Group vs. Origin Agritech | Reinsurance Group vs. Identiv | Reinsurance Group vs. INTUITIVE SURGICAL |
| Chunghwa Telecom vs. ATT Inc | Chunghwa Telecom vs. Deutsche Telekom AG | Chunghwa Telecom vs. Superior Plus Corp | Chunghwa Telecom vs. NMI Holdings |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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