Correlation Between Chunghwa Telecom and PT Gajah

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

Diversification Opportunities for Chunghwa Telecom and PT Gajah

0.22

Correlation Coefficient

Chunghwa Telecom  PT Gajah

Modest diversification

The 3 months correlation between Chunghwa and GH8 is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Chunghwa Telecom Co and PT Gajah Tunggal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Gajah Tunggal 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 PT Gajah. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Gajah Tunggal has no effect on the direction of Chunghwa Telecom i.e., Chunghwa Telecom and PT Gajah go up and down completely randomly.

Pair Corralation between Chunghwa Telecom and PT Gajah

Assuming the 90 days trading horizon Chunghwa Telecom is expected to generate 2.44 times less return on investment than PT Gajah. But when comparing it to its historical volatility, Chunghwa Telecom Co is 5.13 times less risky than PT Gajah. It trades about 0.14 of its potential returns per unit of risk. PT Gajah Tunggal is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  3.71  in PT Gajah Tunggal on April 24, 2025 and sell it today you would earn a total of  0.59  from holding PT Gajah Tunggal or generate 15.9% return on investment over 90 days.

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

Chunghwa Telecom Co  vs.  PT Gajah Tunggal

Chunghwa Telecom

Risk-Adjusted Performance

OK

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.

PT Gajah Tunggal

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PT Gajah Tunggal are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PT Gajah reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chunghwa Telecom and PT Gajah

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

The idea behind Chunghwa Telecom Co and PT Gajah Tunggal 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.