Correlation Between Chunghwa Telecom and Booking Holdings

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

Diversification Opportunities for Chunghwa Telecom and Booking Holdings

0.0

Correlation Coefficient

Chunghwa Telecom  Booking Holdings

Pay attention - limited upside

The 3 months correlation between Chunghwa and Booking is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Chunghwa Telecom Co, and Booking Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Booking Holdings 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 Booking Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Booking Holdings has no effect on the direction of Chunghwa Telecom i.e., Chunghwa Telecom and Booking Holdings go up and down completely randomly.

Pair Corralation between Chunghwa Telecom and Booking Holdings

If you would invest  16,175  in Booking Holdings on October 7, 2024 and sell it today you would earn a total of  1,299  from holding Booking Holdings or generate 8.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Chunghwa Telecom Co,  vs.  Booking Holdings

Chunghwa Telecom Co,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chunghwa Telecom Co, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical indicators, Chunghwa Telecom is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Booking Holdings

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Booking Holdings are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Booking Holdings sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chunghwa Telecom and Booking Holdings

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

The idea behind Chunghwa Telecom Co, and Booking Holdings 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.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.