Correlation Between MediaTek and Harvatek Corp

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

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

Diversification Opportunities for MediaTek and Harvatek Corp

-0.54

Correlation Coefficient

MediaTek  Harvatek Corp

Excellent diversification

The 3 months correlation between MediaTek and Harvatek is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding MediaTek and Harvatek Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harvatek 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 Harvatek Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harvatek Corp has no effect on the direction of MediaTek i.e., MediaTek and Harvatek Corp go up and down completely randomly.

Pair Corralation between MediaTek and Harvatek Corp

Assuming the 90 days trading horizon MediaTek is expected to generate 0.53 times more return on investment than Harvatek Corp. However, MediaTek is 1.9 times less risky than Harvatek Corp. It trades about 0.11 of its potential returns per unit of risk. Harvatek Corp is currently generating about 0.0 per unit of risk. If you would invest  132,500  in MediaTek on October 8, 2024 and sell it today you would earn a total of  4,000  from holding MediaTek or generate 3.02% 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.  Harvatek Corp

MediaTek

Risk-Adjusted Performance

8 of 100

Modest

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 may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Harvatek Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind MediaTek and Harvatek 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.