Correlation Between Sekisui Chemical and Chunghwa Telecom
Can any of the company-specific risk be diversified away by investing in both Sekisui Chemical 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 Sekisui Chemical and Chunghwa Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sekisui Chemical Co and Chunghwa Telecom Co, you can compare the effects of market volatilities on Sekisui Chemical 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 Sekisui Chemical with a short position of Chunghwa Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sekisui Chemical and Chunghwa Telecom.
Diversification Opportunities for Sekisui Chemical and Chunghwa Telecom
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sekisui and Chunghwa is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Sekisui Chemical Co and Chunghwa Telecom Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chunghwa Telecom and Sekisui Chemical 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 Sekisui Chemical Co 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 Sekisui Chemical i.e., Sekisui Chemical and Chunghwa Telecom go up and down completely randomly.
Pair Corralation between Sekisui Chemical and Chunghwa Telecom
Assuming the 90 days horizon Sekisui Chemical Co is expected to generate 1.66 times more return on investment than Chunghwa Telecom. However, Sekisui Chemical is 1.66 times more volatile than Chunghwa Telecom Co. It trades about 0.19 of its potential returns per unit of risk. Chunghwa Telecom Co is currently generating about 0.13 per unit of risk. If you would invest 1,370 in Sekisui Chemical Co on September 4, 2024 and sell it today you would earn a total of 130.00 from holding Sekisui Chemical Co or generate 9.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sekisui Chemical Co vs. Chunghwa Telecom Co
Performance |
| Timeline |
| Sekisui Chemical |
| Chunghwa Telecom |
Sekisui Chemical and Chunghwa Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sekisui Chemical and Chunghwa Telecom
The main advantage of trading using opposite Sekisui Chemical and Chunghwa Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sekisui Chemical 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.| Sekisui Chemical vs. BARRATT DEVEL UNSPADR2 | Sekisui Chemical vs. Superior Plus Corp | Sekisui Chemical vs. NMI Holdings | Sekisui Chemical vs. Origin Agritech |
| Chunghwa Telecom vs. Natural Health Trends | Chunghwa Telecom vs. SAFETY MEDICAL PROD | Chunghwa Telecom vs. Bumrungrad Hospital Public | Chunghwa Telecom vs. NAKED WINES PLC |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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