Correlation Between Chunghwa Telecom and CDN IMPERIAL

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

Diversification Opportunities for Chunghwa Telecom and CDN IMPERIAL

0.69

Correlation Coefficient

Chunghwa Telecom  CDN IMPERIAL

Poor diversification

The 3 months correlation between Chunghwa and CDN is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Chunghwa Telecom Co and CDN IMPERIAL BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDN IMPERIAL BANK 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 CDN IMPERIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDN IMPERIAL BANK has no effect on the direction of Chunghwa Telecom i.e., Chunghwa Telecom and CDN IMPERIAL go up and down completely randomly.

Pair Corralation between Chunghwa Telecom and CDN IMPERIAL

Assuming the 90 days trading horizon Chunghwa Telecom Co is expected to generate 0.53 times more return on investment than CDN IMPERIAL. However, Chunghwa Telecom Co is 1.89 times less risky than CDN IMPERIAL. It trades about 0.0 of its potential returns per unit of risk. CDN IMPERIAL BANK is currently generating about -0.05 per unit of risk. If you would invest  3,620  in Chunghwa Telecom Co on October 10, 2024 and sell it today you would earn a total of  0.00  from holding Chunghwa Telecom Co or generate 0.0% return on investment over 90 days.

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

Chunghwa Telecom Co  vs.  CDN IMPERIAL BANK

Chunghwa Telecom

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Chunghwa Telecom Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. 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.

CDN IMPERIAL BANK

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CDN IMPERIAL BANK are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile forward indicators, CDN IMPERIAL unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chunghwa Telecom and CDN IMPERIAL

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

The idea behind Chunghwa Telecom Co and CDN IMPERIAL BANK 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.