Correlation Between Chunghwa Telecom and ConocoPhillips

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

Diversification Opportunities for Chunghwa Telecom and ConocoPhillips

0.09

Correlation Coefficient

Chunghwa Telecom  ConocoPhillips

Significant diversification

The 3 months correlation between Chunghwa and ConocoPhillips is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Chunghwa Telecom Co and ConocoPhillips in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ConocoPhillips 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 ConocoPhillips. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ConocoPhillips has no effect on the direction of Chunghwa Telecom i.e., Chunghwa Telecom and ConocoPhillips go up and down completely randomly.

Pair Corralation between Chunghwa Telecom and ConocoPhillips

Assuming the 90 days trading horizon Chunghwa Telecom Co is expected to generate 0.67 times more return on investment than ConocoPhillips. However, Chunghwa Telecom Co is 1.49 times less risky than ConocoPhillips. It trades about 0.13 of its potential returns per unit of risk. ConocoPhillips is currently generating about 0.01 per unit of risk. If you would invest  3,373  in Chunghwa Telecom Co on April 23, 2025 and sell it today you would earn a total of  427.00  from holding Chunghwa Telecom Co or generate 12.66% return on investment over 90 days.

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

Chunghwa Telecom Co  vs.  ConocoPhillips

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 10 (%) 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.

ConocoPhillips

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ConocoPhillips are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, ConocoPhillips is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Chunghwa Telecom and ConocoPhillips

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

The idea behind Chunghwa Telecom Co and ConocoPhillips 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.