Correlation Between Xtrackers ShortDAX and Chunghwa Telecom

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

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

Diversification Opportunities for Xtrackers ShortDAX and Chunghwa Telecom

-0.79

Correlation Coefficient

Xtrackers ShortDAX  Chunghwa Telecom

Pay attention - limited upside

The 3 months correlation between Xtrackers and Chunghwa is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and Chunghwa Telecom Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chunghwa Telecom and Xtrackers ShortDAX 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 Xtrackers ShortDAX 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 Xtrackers ShortDAX i.e., Xtrackers ShortDAX and Chunghwa Telecom go up and down completely randomly.

Pair Corralation between Xtrackers ShortDAX and Chunghwa Telecom

Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to under-perform the Chunghwa Telecom. In addition to that, Xtrackers ShortDAX is 1.22 times more volatile than Chunghwa Telecom Co. It trades about -0.2 of its total potential returns per unit of risk. Chunghwa Telecom Co is currently generating about 0.15 per unit of volatility. If you would invest  3,296  in Chunghwa Telecom Co on April 21, 2025 and sell it today you would earn a total of  504.00  from holding Chunghwa Telecom Co or generate 15.29% return on investment over 90 days.

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

Xtrackers ShortDAX  vs.  Chunghwa Telecom Co

Xtrackers ShortDAX

Risk-Adjusted Performance

Very Weak

Over the last 90 days Xtrackers ShortDAX has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Etf's basic indicators remain nearly stable which may send shares a bit higher in August 2025. The current disturbance may also be a sign of long-run up-swing for the Exchange Traded Fund stockholders.

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 12 (%) 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.

Pair Trading with Xtrackers ShortDAX and Chunghwa Telecom

The main advantage of trading using opposite Xtrackers ShortDAX and Chunghwa Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers ShortDAX 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 Xtrackers ShortDAX 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.