Correlation Between Chunghwa Telecom and China Mobile
Can any of the company-specific risk be diversified away by investing in both Chunghwa Telecom and China Mobile 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 Chunghwa Telecom and China Mobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chunghwa Telecom Co and China Mobile, you can compare the effects of market volatilities on Chunghwa Telecom and China Mobile 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 Chunghwa Telecom with a short position of China Mobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chunghwa Telecom and China Mobile.
Diversification Opportunities for Chunghwa Telecom and China Mobile
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Chunghwa and China is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Chunghwa Telecom Co and China Mobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Mobile and Chunghwa Telecom 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 Chunghwa Telecom Co are associated (or correlated) with China Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Mobile has no effect on the direction of Chunghwa Telecom i.e., Chunghwa Telecom and China Mobile go up and down completely randomly.
Pair Corralation between Chunghwa Telecom and China Mobile
Assuming the 90 days trading horizon Chunghwa Telecom is expected to generate 1.91 times less return on investment than China Mobile. But when comparing it to its historical volatility, Chunghwa Telecom Co is 2.28 times less risky than China Mobile. It trades about 0.12 of its potential returns per unit of risk. China Mobile is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,369 in China Mobile on September 6, 2024 and sell it today you would earn a total of 31.00 from holding China Mobile or generate 2.26% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Chunghwa Telecom Co vs. China Mobile
Performance |
Timeline |
Chunghwa Telecom |
China Mobile |
Chunghwa Telecom and China Mobile Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Chunghwa Telecom and China Mobile
The main advantage of trading using opposite Chunghwa Telecom and China Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chunghwa Telecom position performs unexpectedly, China Mobile 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 China Mobile will offset losses from the drop in China Mobile's long position.Chunghwa Telecom vs. China Steel Corp | Chunghwa Telecom vs. Formosa Plastics Corp | Chunghwa Telecom vs. Cathay Financial Holding | Chunghwa Telecom vs. Fubon Financial Holding |
China Mobile vs. BenQ Medical Technology | China Mobile vs. Energenesis Biomedical Co | China Mobile vs. HOYA Resort Hotel | China Mobile vs. Insyde Software |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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