Correlation Between Ching Feng and MediaTek

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

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

Diversification Opportunities for Ching Feng and MediaTek

-0.73

Correlation Coefficient

Ching Feng  MediaTek

Pay attention - limited upside

The 3 months correlation between Ching and MediaTek is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Ching Feng Home and MediaTek in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MediaTek and Ching Feng 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 Ching Feng Home 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 Ching Feng i.e., Ching Feng and MediaTek go up and down completely randomly.

Pair Corralation between Ching Feng and MediaTek

Assuming the 90 days trading horizon Ching Feng Home is expected to under-perform the MediaTek. In addition to that, Ching Feng is 1.11 times more volatile than MediaTek. It trades about -0.18 of its total potential returns per unit of risk. MediaTek is currently generating about 0.08 per unit of volatility. If you would invest  129,000  in MediaTek on October 6, 2024 and sell it today you would earn a total of  7,500  from holding MediaTek or generate 5.81% return on investment over 90 days.

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

Ching Feng Home  vs.  MediaTek

Ching Feng Home

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ching Feng Home 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.

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.

Pair Trading with Ching Feng and MediaTek

The main advantage of trading using opposite Ching Feng and MediaTek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ching Feng 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 Ching Feng Home 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.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.