Correlation Between Kroger and Chunghwa Telecom

Can any of the company-specific risk be diversified away by investing in both Kroger and Chunghwa Telecom 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 Kroger and Chunghwa Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between The Kroger Co and Chunghwa Telecom Co,, you can compare the effects of market volatilities on Kroger and Chunghwa Telecom 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 Kroger with a short position of Chunghwa Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kroger and Chunghwa Telecom.

Diversification Opportunities for Kroger and Chunghwa Telecom

0.0

Correlation Coefficient

Kroger  Chunghwa Telecom

Pay attention - limited upside

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

Pair Corralation between Kroger and Chunghwa Telecom

If you would invest  32,172  in The Kroger Co on October 26, 2024 and sell it today you would earn a total of  2,962  from holding The Kroger Co or generate 9.21% return on investment over 90 days.

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

The Kroger Co  vs.  Chunghwa Telecom Co,

The Kroger

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in The Kroger Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Kroger may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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.

Pair Trading with Kroger and Chunghwa Telecom

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

The idea behind The Kroger Co and Chunghwa Telecom Co, 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.