Correlation Between MediaTek and Sincere Navigation

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

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

Diversification Opportunities for MediaTek and Sincere Navigation

-0.48

Correlation Coefficient

MediaTek  Sincere Navigation

Very good diversification

The 3 months correlation between MediaTek and Sincere is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding MediaTek and Sincere Navigation Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sincere Navigation Corp 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 Sincere Navigation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sincere Navigation Corp has no effect on the direction of MediaTek i.e., MediaTek and Sincere Navigation go up and down completely randomly.

Pair Corralation between MediaTek and Sincere Navigation

Assuming the 90 days trading horizon MediaTek is expected to generate 1.27 times more return on investment than Sincere Navigation. However, MediaTek is 1.27 times more volatile than Sincere Navigation Corp. It trades about 0.09 of its potential returns per unit of risk. Sincere Navigation Corp is currently generating about -0.11 per unit of risk. If you would invest  130,000  in MediaTek on September 23, 2024 and sell it today you would earn a total of  9,000  from holding MediaTek or generate 6.92% return on investment over 90 days.

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

MediaTek  vs.  Sincere Navigation Corp

MediaTek

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MediaTek are ranked lower than 11 (%) 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.

Sincere Navigation Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sincere Navigation Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Sincere Navigation 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 MediaTek and Sincere Navigation

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

The idea behind MediaTek and Sincere Navigation Corp 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.