Correlation Between Chunghwa Telecom and MacroWell OMG

Can any of the company-specific risk be diversified away by investing in both Chunghwa Telecom and MacroWell OMG 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 MacroWell OMG 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 MacroWell OMG Digital, you can compare the effects of market volatilities on Chunghwa Telecom and MacroWell OMG 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 MacroWell OMG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chunghwa Telecom and MacroWell OMG.

Diversification Opportunities for Chunghwa Telecom and MacroWell OMG

-0.5

Correlation Coefficient

Chunghwa Telecom  MacroWell OMG

Very good diversification

The 3 months correlation between Chunghwa and MacroWell is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Chunghwa Telecom Co and MacroWell OMG Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MacroWell OMG Digital 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 MacroWell OMG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MacroWell OMG Digital has no effect on the direction of Chunghwa Telecom i.e., Chunghwa Telecom and MacroWell OMG go up and down completely randomly.

Pair Corralation between Chunghwa Telecom and MacroWell OMG

Assuming the 90 days trading horizon Chunghwa Telecom is expected to generate 2.28 times less return on investment than MacroWell OMG. But when comparing it to its historical volatility, Chunghwa Telecom Co is 3.99 times less risky than MacroWell OMG. It trades about 0.02 of its potential returns per unit of risk. MacroWell OMG Digital is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  9,322  in MacroWell OMG Digital on October 9, 2024 and sell it today you would lose (222.00) from holding MacroWell OMG Digital or give up 2.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Chunghwa Telecom Co  vs.  MacroWell OMG Digital

Chunghwa Telecom

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Chunghwa Telecom Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Chunghwa Telecom is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

MacroWell OMG Digital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MacroWell OMG Digital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, MacroWell OMG is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Chunghwa Telecom and MacroWell OMG

The main advantage of trading using opposite Chunghwa Telecom and MacroWell OMG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chunghwa Telecom position performs unexpectedly, MacroWell OMG 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 MacroWell OMG will offset losses from the drop in MacroWell OMG's long position.

The idea behind Chunghwa Telecom Co and MacroWell OMG Digital pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.