Correlation Between MediaTek and I Chiun

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

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

Diversification Opportunities for MediaTek and I Chiun

0.83

Correlation Coefficient

MediaTek  I Chiun

Very poor diversification

The 3 months correlation between MediaTek and 2486 is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding MediaTek and I Chiun Precision Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on I Chiun Precision 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 I Chiun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of I Chiun Precision has no effect on the direction of MediaTek i.e., MediaTek and I Chiun go up and down completely randomly.

Pair Corralation between MediaTek and I Chiun

Assuming the 90 days trading horizon MediaTek is expected to generate 2.19 times less return on investment than I Chiun. But when comparing it to its historical volatility, MediaTek is 1.48 times less risky than I Chiun. It trades about 0.08 of its potential returns per unit of risk. I Chiun Precision Industry is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  4,625  in I Chiun Precision Industry on September 15, 2024 and sell it today you would earn a total of  7,425  from holding I Chiun Precision Industry or generate 160.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.62%
Values	Daily Returns

MediaTek  vs.  I Chiun Precision Industry

MediaTek

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MediaTek are ranked lower than 13 (%) 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.

I Chiun Precision

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in I Chiun Precision Industry are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, I Chiun showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MediaTek and I Chiun

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

The idea behind MediaTek and I Chiun Precision Industry 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.