Correlation Between MediaTek and Episil Holding

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

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

Diversification Opportunities for MediaTek and Episil Holding

-0.67

Correlation Coefficient

MediaTek  Episil Holding

Excellent diversification

The 3 months correlation between MediaTek and Episil is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding MediaTek and Episil Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Episil Holding 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 Episil Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Episil Holding has no effect on the direction of MediaTek i.e., MediaTek and Episil Holding go up and down completely randomly.

Pair Corralation between MediaTek and Episil Holding

Assuming the 90 days trading horizon MediaTek is expected to generate 0.49 times more return on investment than Episil Holding. However, MediaTek is 2.02 times less risky than Episil Holding. It trades about 0.22 of its potential returns per unit of risk. Episil Holding is currently generating about -0.12 per unit of risk. If you would invest  132,500  in MediaTek on October 9, 2024 and sell it today you would earn a total of  10,000  from holding MediaTek or generate 7.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

MediaTek  vs.  Episil Holding

MediaTek

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MediaTek are ranked lower than 9 (%) 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.

Episil Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Episil Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with MediaTek and Episil Holding

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

The idea behind MediaTek and Episil Holding 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.