Correlation Between Chunghwa Telecom and Media Technologies

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

Diversification Opportunities for Chunghwa Telecom and Media Technologies

-0.44

Correlation Coefficient

Chunghwa Telecom  Media Technologies

Very good diversification

The 3 months correlation between Chunghwa and Media is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Chunghwa Telecom Co and Media Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Media Technologies 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 Media Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Media Technologies has no effect on the direction of Chunghwa Telecom i.e., Chunghwa Telecom and Media Technologies go up and down completely randomly.

Pair Corralation between Chunghwa Telecom and Media Technologies

Considering the 90-day investment horizon Chunghwa Telecom is expected to generate 149.31 times less return on investment than Media Technologies. But when comparing it to its historical volatility, Chunghwa Telecom Co is 60.33 times less risky than Media Technologies. It trades about 0.05 of its potential returns per unit of risk. Media Technologies is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  15.00  in Media Technologies on May 5, 2025 and sell it today you would lose (4.00) from holding Media Technologies or give up 26.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.92%
Values	Daily Returns

Chunghwa Telecom Co  vs.  Media Technologies

Chunghwa Telecom

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Chunghwa Telecom Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical indicators, Chunghwa Telecom is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Media Technologies

Risk-Adjusted Performance

OK

Over the last 90 days Media Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather weak basic indicators, Media Technologies exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chunghwa Telecom and Media Technologies

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

The idea behind Chunghwa Telecom Co and Media Technologies 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.