Correlation Between ATT and Chunghwa Telecom
Can any of the company-specific risk be diversified away by investing in both ATT 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 ATT and Chunghwa Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATT Inc and Chunghwa Telecom Co, you can compare the effects of market volatilities on ATT 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 ATT with a short position of Chunghwa Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and Chunghwa Telecom.
Diversification Opportunities for ATT and Chunghwa Telecom
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ATT and Chunghwa is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and Chunghwa Telecom Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chunghwa Telecom and ATT 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 ATT Inc 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 ATT i.e., ATT and Chunghwa Telecom go up and down completely randomly.
Pair Corralation between ATT and Chunghwa Telecom
Taking into account the 90-day investment horizon ATT Inc is expected to generate 1.95 times more return on investment than Chunghwa Telecom. However, ATT is 1.95 times more volatile than Chunghwa Telecom Co. It trades about 0.05 of its potential returns per unit of risk. Chunghwa Telecom Co is currently generating about 0.03 per unit of risk. If you would invest 1,724 in ATT Inc on August 28, 2024 and sell it today you would earn a total of 586.00 from holding ATT Inc or generate 33.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ATT Inc vs. Chunghwa Telecom Co
Performance |
| Timeline |
| ATT Inc |
| Chunghwa Telecom |
ATT and Chunghwa Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATT and Chunghwa Telecom
The main advantage of trading using opposite ATT and Chunghwa Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT 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.| ATT vs. Liberty Broadband Srs | ATT vs. Ribbon Communications | ATT vs. Liberty Broadband Srs | ATT vs. Shenandoah Telecommunications Co |
| Chunghwa Telecom vs. Liberty Broadband Srs | Chunghwa Telecom vs. Ribbon Communications | Chunghwa Telecom vs. Liberty Broadband Srs | Chunghwa Telecom vs. Shenandoah Telecommunications Co |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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