Correlation Between Sixt Leasing and Chunghwa Telecom

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

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

Diversification Opportunities for Sixt Leasing and Chunghwa Telecom

-0.65

Correlation Coefficient

Sixt Leasing  Chunghwa Telecom

Excellent diversification

The 3 months correlation between Sixt and Chunghwa is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Sixt Leasing SE and Chunghwa Telecom Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chunghwa Telecom and Sixt Leasing 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 Sixt Leasing SE 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 has no effect on the direction of Sixt Leasing i.e., Sixt Leasing and Chunghwa Telecom go up and down completely randomly.

Pair Corralation between Sixt Leasing and Chunghwa Telecom

Assuming the 90 days trading horizon Sixt Leasing SE is expected to generate 3.54 times more return on investment than Chunghwa Telecom. However, Sixt Leasing is 3.54 times more volatile than Chunghwa Telecom Co. It trades about 0.06 of its potential returns per unit of risk. Chunghwa Telecom Co is currently generating about -0.04 per unit of risk. If you would invest  920.00  in Sixt Leasing SE on September 26, 2024 and sell it today you would earn a total of  20.00  from holding Sixt Leasing SE or generate 2.17% return on investment over 90 days.

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

Sixt Leasing SE  vs.  Chunghwa Telecom Co

Sixt Leasing SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sixt Leasing SE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Chunghwa Telecom

Risk-Adjusted Performance

0 of 100

Insignificant

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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Sixt Leasing and Chunghwa Telecom

The main advantage of trading using opposite Sixt Leasing and Chunghwa Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sixt Leasing 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 Sixt Leasing SE 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.