Correlation Between Chunghwa Telecom and Capital One

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

Diversification Opportunities for Chunghwa Telecom and Capital One

0.0

Correlation Coefficient

Chunghwa Telecom  Capital One

Pay attention - limited upside

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

Pair Corralation between Chunghwa Telecom and Capital One

If you would invest  43,407  in Capital One Financial on October 25, 2024 and sell it today you would earn a total of  13,749  from holding Capital One Financial or generate 31.67% 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.  Capital One Financial

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.

Capital One Financial

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Capital One Financial are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Capital One sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chunghwa Telecom and Capital One

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

The idea behind Chunghwa Telecom Co, and Capital One Financial 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.