Correlation Between MediaTek and Yeou Yih

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

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

Diversification Opportunities for MediaTek and Yeou Yih

-0.66

Correlation Coefficient

MediaTek  Yeou Yih

Excellent diversification

The 3 months correlation between MediaTek and Yeou is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding MediaTek and Yeou Yih Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yeou Yih Steel 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 Yeou Yih. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yeou Yih Steel has no effect on the direction of MediaTek i.e., MediaTek and Yeou Yih go up and down completely randomly.

Pair Corralation between MediaTek and Yeou Yih

Assuming the 90 days trading horizon MediaTek is expected to generate 2.2 times more return on investment than Yeou Yih. However, MediaTek is 2.2 times more volatile than Yeou Yih Steel. It trades about 0.1 of its potential returns per unit of risk. Yeou Yih Steel is currently generating about -0.43 per unit of risk. If you would invest  132,500  in MediaTek on October 6, 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	Weak
Accuracy	100.0%
Values	Daily Returns

MediaTek  vs.  Yeou Yih Steel

MediaTek

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MediaTek are ranked lower than 6 (%) 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.

Yeou Yih Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yeou Yih Steel 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 Yeou Yih

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

The idea behind MediaTek and Yeou Yih Steel 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.