Correlation Between MediaTek and Jenn Feng

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

By analyzing existing cross correlation between MediaTek and Jenn Feng New, you can compare the effects of market volatilities on MediaTek and Jenn Feng 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 MediaTek with a short position of Jenn Feng. Check out your portfolio center. Please also check ongoing floating volatility patterns of MediaTek and Jenn Feng.

Diversification Opportunities for MediaTek and Jenn Feng

0.8

Correlation Coefficient

MediaTek  Jenn Feng

Very poor diversification

The 3 months correlation between MediaTek and Jenn is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding MediaTek and Jenn Feng New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jenn Feng New and MediaTek 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 MediaTek are associated (or correlated) with Jenn Feng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jenn Feng New has no effect on the direction of MediaTek i.e., MediaTek and Jenn Feng go up and down completely randomly.

Pair Corralation between MediaTek and Jenn Feng

Assuming the 90 days trading horizon MediaTek is expected to generate 8.38 times less return on investment than Jenn Feng. But when comparing it to its historical volatility, MediaTek is 8.71 times less risky than Jenn Feng. It trades about 0.22 of its potential returns per unit of risk. Jenn Feng New is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  1,740  in Jenn Feng New on October 9, 2024 and sell it today you would earn a total of  1,050  from holding Jenn Feng New or generate 60.34% return on investment over 90 days.

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

MediaTek  vs.  Jenn Feng New

MediaTek

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MediaTek are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, MediaTek showed solid returns over the last few months and may actually be approaching a breakup point.

Jenn Feng New

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jenn Feng New are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Jenn Feng showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MediaTek and Jenn Feng

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

The idea behind MediaTek and Jenn Feng New 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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .