Correlation Between Chunghwa Telecom and FORMPIPE SOFTWARE

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

Diversification Opportunities for Chunghwa Telecom and FORMPIPE SOFTWARE

0.47

Correlation Coefficient

Chunghwa Telecom  FORMPIPE SOFTWARE

Very weak diversification

The 3 months correlation between Chunghwa and FORMPIPE is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Chunghwa Telecom Co and FORMPIPE SOFTWARE AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FORMPIPE SOFTWARE 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 FORMPIPE SOFTWARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FORMPIPE SOFTWARE has no effect on the direction of Chunghwa Telecom i.e., Chunghwa Telecom and FORMPIPE SOFTWARE go up and down completely randomly.

Pair Corralation between Chunghwa Telecom and FORMPIPE SOFTWARE

Assuming the 90 days trading horizon Chunghwa Telecom Co is expected to generate 0.25 times more return on investment than FORMPIPE SOFTWARE. However, Chunghwa Telecom Co is 4.02 times less risky than FORMPIPE SOFTWARE. It trades about -0.03 of its potential returns per unit of risk. FORMPIPE SOFTWARE AB is currently generating about -0.1 per unit of risk. If you would invest  3,680  in Chunghwa Telecom Co on August 6, 2025 and sell it today you would lose (20.00) from holding Chunghwa Telecom Co or give up 0.54% of portfolio value over 90 days.

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

Chunghwa Telecom Co  vs.  FORMPIPE SOFTWARE AB

Chunghwa Telecom

Risk-Adjusted Performance

Weakest

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.

FORMPIPE SOFTWARE

Risk-Adjusted Performance

Weakest

Over the last 90 days FORMPIPE SOFTWARE AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Chunghwa Telecom and FORMPIPE SOFTWARE

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

The idea behind Chunghwa Telecom Co and FORMPIPE SOFTWARE AB 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.