Correlation Between Century Wind and MediaTek
Can any of the company-specific risk be diversified away by investing in both Century Wind 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 Century Wind and MediaTek into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Century Wind Power and MediaTek, you can compare the effects of market volatilities on Century Wind 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 Century Wind with a short position of MediaTek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Wind and MediaTek.
Diversification Opportunities for Century Wind and MediaTek
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Century and MediaTek is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Century Wind Power and MediaTek in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MediaTek and Century Wind 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 Century Wind Power 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 Century Wind i.e., Century Wind and MediaTek go up and down completely randomly.
Pair Corralation between Century Wind and MediaTek
Assuming the 90 days trading horizon Century Wind Power is expected to generate 0.84 times more return on investment than MediaTek. However, Century Wind Power is 1.18 times less risky than MediaTek. It trades about 0.05 of its potential returns per unit of risk. MediaTek is currently generating about -0.13 per unit of risk. If you would invest 26,800 in Century Wind Power on December 10, 2024 and sell it today you would earn a total of 400.00 from holding Century Wind Power or generate 1.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Century Wind Power vs. MediaTek
Performance |
| Timeline |
| Century Wind Power |
| MediaTek |
Century Wind and MediaTek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Century Wind and MediaTek
The main advantage of trading using opposite Century Wind and MediaTek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Wind 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.| Century Wind vs. Winstek Semiconductor Co | Century Wind vs. Sinopower Semiconductor | Century Wind vs. Loop Telecommunication International | Century Wind vs. Realtek Semiconductor Corp |
| MediaTek vs. Hon Hai Precision | MediaTek vs. United Microelectronics | MediaTek vs. LARGAN Precision Co | MediaTek vs. Delta Electronics |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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