Correlation Between MediaTek and Chenming Mold

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

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

Diversification Opportunities for MediaTek and Chenming Mold

-0.36

Correlation Coefficient

MediaTek  Chenming Mold

Very good diversification

The 3 months correlation between MediaTek and Chenming is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding MediaTek and Chenming Mold Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chenming Mold Industrial 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 Chenming Mold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chenming Mold Industrial has no effect on the direction of MediaTek i.e., MediaTek and Chenming Mold go up and down completely randomly.

Pair Corralation between MediaTek and Chenming Mold

Assuming the 90 days trading horizon MediaTek is expected to generate 0.6 times more return on investment than Chenming Mold. However, MediaTek is 1.65 times less risky than Chenming Mold. It trades about 0.11 of its potential returns per unit of risk. Chenming Mold Industrial is currently generating about -0.04 per unit of risk. If you would invest  132,000  in MediaTek on December 4, 2024 and sell it today you would earn a total of  15,000  from holding MediaTek or generate 11.36% return on investment over 90 days.

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

MediaTek  vs.  Chenming Mold Industrial

MediaTek

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MediaTek are ranked lower than 8 (%) 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.

Chenming Mold Industrial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chenming Mold Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with MediaTek and Chenming Mold

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

The idea behind MediaTek and Chenming Mold Industrial 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 Commodity Directory module to find actively traded commodities issued by global exchanges.