Correlation Between Realtek Semiconductor and Ma Kuang

Can any of the company-specific risk be diversified away by investing in both Realtek Semiconductor and Ma Kuang 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 Realtek Semiconductor and Ma Kuang into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Realtek Semiconductor Corp and Ma Kuang Healthcare, you can compare the effects of market volatilities on Realtek Semiconductor and Ma Kuang 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 Realtek Semiconductor with a short position of Ma Kuang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Realtek Semiconductor and Ma Kuang.

Diversification Opportunities for Realtek Semiconductor and Ma Kuang

-0.11

Correlation Coefficient

Realtek Semiconductor  Ma Kuang

Good diversification

The 3 months correlation between Realtek and 4139 is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Realtek Semiconductor Corp and Ma Kuang Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ma Kuang Healthcare and Realtek Semiconductor 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 Realtek Semiconductor Corp are associated (or correlated) with Ma Kuang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ma Kuang Healthcare has no effect on the direction of Realtek Semiconductor i.e., Realtek Semiconductor and Ma Kuang go up and down completely randomly.

Pair Corralation between Realtek Semiconductor and Ma Kuang

Assuming the 90 days trading horizon Realtek Semiconductor is expected to generate 1.81 times less return on investment than Ma Kuang. But when comparing it to its historical volatility, Realtek Semiconductor Corp is 1.32 times less risky than Ma Kuang. It trades about 0.03 of its potential returns per unit of risk. Ma Kuang Healthcare is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  3,020  in Ma Kuang Healthcare on September 29, 2024 and sell it today you would earn a total of  295.00  from holding Ma Kuang Healthcare or generate 9.77% return on investment over 90 days.

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

Realtek Semiconductor Corp  vs.  Ma Kuang Healthcare

Realtek Semiconductor

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Realtek Semiconductor Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Realtek Semiconductor showed solid returns over the last few months and may actually be approaching a breakup point.

Ma Kuang Healthcare

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ma Kuang Healthcare are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Ma Kuang is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Realtek Semiconductor and Ma Kuang

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

The idea behind Realtek Semiconductor Corp and Ma Kuang Healthcare 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.