Correlation Between CKM Building and MediaTek

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

By analyzing existing cross correlation between CKM Building Material and MediaTek, you can compare the effects of market volatilities on CKM Building and MediaTek 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 CKM Building with a short position of MediaTek. Check out your portfolio center. Please also check ongoing floating volatility patterns of CKM Building and MediaTek.

Diversification Opportunities for CKM Building and MediaTek

0.73

Correlation Coefficient

CKM Building  MediaTek

Poor diversification

The 3 months correlation between CKM and MediaTek is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding CKM Building Material and MediaTek in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MediaTek and CKM Building 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 CKM Building Material are associated (or correlated) with MediaTek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MediaTek has no effect on the direction of CKM Building i.e., CKM Building and MediaTek go up and down completely randomly.

Pair Corralation between CKM Building and MediaTek

Assuming the 90 days trading horizon CKM Building is expected to generate 5.15 times less return on investment than MediaTek. But when comparing it to its historical volatility, CKM Building Material is 1.52 times less risky than MediaTek. It trades about 0.03 of its potential returns per unit of risk. MediaTek is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  131,500  in MediaTek on October 25, 2024 and sell it today you would earn a total of  15,000  from holding MediaTek or generate 11.41% return on investment over 90 days.

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

CKM Building Material  vs.  MediaTek

CKM Building Material

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CKM Building Material are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, CKM Building is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

MediaTek

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MediaTek are ranked lower than 7 (%) 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.

Pair Trading with CKM Building and MediaTek

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

The idea behind CKM Building Material and MediaTek 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.