Correlation Between Seagate Technology and Chunghwa Telecom

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Can any of the company-specific risk be diversified away by investing in both Seagate Technology 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 Seagate Technology and Chunghwa Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seagate Technology Holdings and Chunghwa Telecom Co,, you can compare the effects of market volatilities on Seagate Technology 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 Seagate Technology with a short position of Chunghwa Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seagate Technology and Chunghwa Telecom.

Diversification Opportunities for Seagate Technology and Chunghwa Telecom

0.92
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Seagate and Chunghwa is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Seagate Technology Holdings and Chunghwa Telecom Co, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chunghwa Telecom Co, and Seagate Technology 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 Seagate Technology Holdings 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 Co, has no effect on the direction of Seagate Technology i.e., Seagate Technology and Chunghwa Telecom go up and down completely randomly.

Pair Corralation between Seagate Technology and Chunghwa Telecom

Assuming the 90 days trading horizon Seagate Technology Holdings is expected to generate 2.02 times more return on investment than Chunghwa Telecom. However, Seagate Technology is 2.02 times more volatile than Chunghwa Telecom Co,. It trades about 0.3 of its potential returns per unit of risk. Chunghwa Telecom Co, is currently generating about 0.11 per unit of risk. If you would invest  39,625  in Seagate Technology Holdings on April 6, 2025 and sell it today you would earn a total of  42,129  from holding Seagate Technology Holdings or generate 106.32% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy98.39%
ValuesDaily Returns

Seagate Technology Holdings  vs.  Chunghwa Telecom Co,

 Performance 
       Timeline  
Seagate Technology 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Seagate Technology Holdings are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Seagate Technology sustained solid returns over the last few months and may actually be approaching a breakup point.
Chunghwa Telecom Co, 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Chunghwa Telecom Co, are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical indicators, Chunghwa Telecom sustained solid returns over the last few months and may actually be approaching a breakup point.

Seagate Technology and Chunghwa Telecom Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Seagate Technology and Chunghwa Telecom

The main advantage of trading using opposite Seagate Technology and Chunghwa Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seagate Technology 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 Seagate Technology Holdings 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.

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