Correlation Between MediaTek and Delta Asia

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

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

Diversification Opportunities for MediaTek and Delta Asia

0.22

Correlation Coefficient

MediaTek  Delta Asia

Modest diversification

The 3 months correlation between MediaTek and Delta is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding MediaTek and Delta Asia International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delta Asia International 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 Delta Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delta Asia International has no effect on the direction of MediaTek i.e., MediaTek and Delta Asia go up and down completely randomly.

Pair Corralation between MediaTek and Delta Asia

Assuming the 90 days trading horizon MediaTek is expected to generate 2.08 times more return on investment than Delta Asia. However, MediaTek is 2.08 times more volatile than Delta Asia International. It trades about 0.11 of its potential returns per unit of risk. Delta Asia International is currently generating about 0.03 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 Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

MediaTek  vs.  Delta Asia International

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.

Delta Asia International

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Delta Asia International are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Delta Asia 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 Delta Asia

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

The idea behind MediaTek and Delta Asia International 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.