Correlation Between Sea and Chunghwa Telecom

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

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

Diversification Opportunities for Sea and Chunghwa Telecom

0.22

Correlation Coefficient

Sea  Chunghwa Telecom

Modest diversification

The 3 months correlation between Sea and Chunghwa is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Sea and Chunghwa Telecom Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chunghwa Telecom and Sea 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 Sea 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 Sea i.e., Sea and Chunghwa Telecom go up and down completely randomly.

Pair Corralation between Sea and Chunghwa Telecom

Allowing for the 90-day total investment horizon Sea is expected to generate 2.87 times more return on investment than Chunghwa Telecom. However, Sea is 2.87 times more volatile than Chunghwa Telecom Co. It trades about 0.07 of its potential returns per unit of risk. Chunghwa Telecom Co is currently generating about 0.1 per unit of risk. If you would invest  14,253  in Sea on May 7, 2025 and sell it today you would earn a total of  1,421  from holding Sea or generate 9.97% return on investment over 90 days.

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

Sea  vs.  Chunghwa Telecom Co

Sea

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Sea are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent technical and fundamental indicators, Sea may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Chunghwa Telecom

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Chunghwa Telecom Co are ranked lower than 7 (%) 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.

Pair Trading with Sea and Chunghwa Telecom

The main advantage of trading using opposite Sea and Chunghwa Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sea 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 Sea 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.