Correlation Between MediaTek and Feng Ching

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

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

Diversification Opportunities for MediaTek and Feng Ching

0.19

Correlation Coefficient

MediaTek  Feng Ching

Average diversification

The 3 months correlation between MediaTek and Feng is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding MediaTek and Feng Ching Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Feng Ching Metal 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 Feng Ching. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Feng Ching Metal has no effect on the direction of MediaTek i.e., MediaTek and Feng Ching go up and down completely randomly.

Pair Corralation between MediaTek and Feng Ching

Assuming the 90 days trading horizon MediaTek is expected to generate 3.4 times less return on investment than Feng Ching. But when comparing it to its historical volatility, MediaTek is 1.41 times less risky than Feng Ching. It trades about 0.05 of its potential returns per unit of risk. Feng Ching Metal is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,820  in Feng Ching Metal on December 30, 2024 and sell it today you would earn a total of  390.00  from holding Feng Ching Metal or generate 21.43% return on investment over 90 days.

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

MediaTek  vs.  Feng Ching Metal

MediaTek

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MediaTek are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, MediaTek may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Feng Ching Metal

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Feng Ching Metal are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Feng Ching showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MediaTek and Feng Ching

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

The idea behind MediaTek and Feng Ching Metal 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.

Check out your portfolio center.

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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.