Correlation Between Chunghwa Telecom and International Game

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

Diversification Opportunities for Chunghwa Telecom and International Game

0.13

Correlation Coefficient

Chunghwa Telecom  International Game

Average diversification

The 3 months correlation between Chunghwa and International is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Chunghwa Telecom Co and International Game Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Game 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 International Game. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Game has no effect on the direction of Chunghwa Telecom i.e., Chunghwa Telecom and International Game go up and down completely randomly.

Pair Corralation between Chunghwa Telecom and International Game

Assuming the 90 days trading horizon Chunghwa Telecom Co is expected to generate 0.46 times more return on investment than International Game. However, Chunghwa Telecom Co is 2.19 times less risky than International Game. It trades about -0.02 of its potential returns per unit of risk. International Game Technology is currently generating about -0.05 per unit of risk. If you would invest  3,620  in Chunghwa Telecom Co on December 25, 2024 and sell it today you would lose (40.00) from holding Chunghwa Telecom Co or give up 1.1% of portfolio value over 90 days.

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

Chunghwa Telecom Co  vs.  International Game Technology

Chunghwa Telecom

Risk-Adjusted Performance

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 nearly stable basic indicators, Chunghwa Telecom is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

International Game

Risk-Adjusted Performance

Very Weak

Over the last 90 days International Game Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, International Game is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Chunghwa Telecom and International Game

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

The idea behind Chunghwa Telecom Co and International Game Technology 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.