Correlation Between Chunghwa Telecom and WOORI FIN

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

Diversification Opportunities for Chunghwa Telecom and WOORI FIN

0.65

Correlation Coefficient

Chunghwa Telecom  WOORI FIN

Poor diversification

The 3 months correlation between Chunghwa and WOORI is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Chunghwa Telecom Co and WOORI FIN GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WOORI FIN GRP 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 WOORI FIN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WOORI FIN GRP has no effect on the direction of Chunghwa Telecom i.e., Chunghwa Telecom and WOORI FIN go up and down completely randomly.

Pair Corralation between Chunghwa Telecom and WOORI FIN

Assuming the 90 days trading horizon Chunghwa Telecom is expected to generate 3.37 times less return on investment than WOORI FIN. But when comparing it to its historical volatility, Chunghwa Telecom Co is 2.41 times less risky than WOORI FIN. It trades about 0.14 of its potential returns per unit of risk. WOORI FIN GRP is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  2,984  in WOORI FIN GRP on April 24, 2025 and sell it today you would earn a total of  1,536  from holding WOORI FIN GRP or generate 51.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Chunghwa Telecom Co  vs.  WOORI FIN GRP

Chunghwa Telecom

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chunghwa Telecom Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Chunghwa Telecom reported solid returns over the last few months and may actually be approaching a breakup point.

WOORI FIN GRP

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WOORI FIN GRP are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, WOORI FIN reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chunghwa Telecom and WOORI FIN

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

The idea behind Chunghwa Telecom Co and WOORI FIN GRP 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.