Correlation Between MediaTek and Coxon Precise

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

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

Diversification Opportunities for MediaTek and Coxon Precise

-0.18

Correlation Coefficient

MediaTek  Coxon Precise

Good diversification

The 3 months correlation between MediaTek and Coxon is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding MediaTek and Coxon Precise Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coxon Precise 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 Coxon Precise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coxon Precise Industrial has no effect on the direction of MediaTek i.e., MediaTek and Coxon Precise go up and down completely randomly.

Pair Corralation between MediaTek and Coxon Precise

Assuming the 90 days trading horizon MediaTek is expected to generate 0.93 times more return on investment than Coxon Precise. However, MediaTek is 1.08 times less risky than Coxon Precise. It trades about 0.08 of its potential returns per unit of risk. Coxon Precise Industrial is currently generating about 0.05 per unit of risk. If you would invest  69,400  in MediaTek on October 4, 2024 and sell it today you would earn a total of  72,100  from holding MediaTek or generate 103.89% return on investment over 90 days.

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

MediaTek  vs.  Coxon Precise Industrial

MediaTek

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MediaTek are ranked lower than 10 (%) 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.

Coxon Precise Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Coxon Precise Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Coxon Precise 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 Coxon Precise

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

The idea behind MediaTek and Coxon Precise 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.