Correlation Between AU Optronics and MediaTek
Can any of the company-specific risk be diversified away by investing in both AU Optronics 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 AU Optronics and MediaTek into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AU Optronics and MediaTek, you can compare the effects of market volatilities on AU Optronics 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 AU Optronics with a short position of MediaTek. Check out your portfolio center. Please also check ongoing floating volatility patterns of AU Optronics and MediaTek.
Diversification Opportunities for AU Optronics and MediaTek
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between 2409 and MediaTek is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding AU Optronics and MediaTek in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MediaTek and AU Optronics 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 AU Optronics 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 AU Optronics i.e., AU Optronics and MediaTek go up and down completely randomly.
Pair Corralation between AU Optronics and MediaTek
Assuming the 90 days trading horizon AU Optronics is expected to generate 8.93 times less return on investment than MediaTek. But when comparing it to its historical volatility, AU Optronics is 1.24 times less risky than MediaTek. It trades about 0.01 of its potential returns per unit of risk. MediaTek is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 73,900 in MediaTek on August 26, 2024 and sell it today you would earn a total of 57,100 from holding MediaTek or generate 77.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AU Optronics vs. MediaTek
Performance |
| Timeline |
| AU Optronics |
| MediaTek |
AU Optronics and MediaTek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AU Optronics and MediaTek
The main advantage of trading using opposite AU Optronics and MediaTek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AU Optronics 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.| AU Optronics vs. Novatek Microelectronics Corp | AU Optronics vs. Quanta Computer | AU Optronics vs. United Microelectronics |
| MediaTek vs. Novatek Microelectronics Corp | MediaTek vs. Quanta Computer | MediaTek vs. United Microelectronics |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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