Correlation Between MediaTek and Lily Textile
Can any of the company-specific risk be diversified away by investing in both MediaTek and Lily Textile 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 Lily Textile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MediaTek and Lily Textile Co, you can compare the effects of market volatilities on MediaTek and Lily Textile 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 Lily Textile. Check out your portfolio center. Please also check ongoing floating volatility patterns of MediaTek and Lily Textile.
Diversification Opportunities for MediaTek and Lily Textile
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MediaTek and Lily is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding MediaTek and Lily Textile Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lily Textile 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 Lily Textile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lily Textile has no effect on the direction of MediaTek i.e., MediaTek and Lily Textile go up and down completely randomly.
Pair Corralation between MediaTek and Lily Textile
Assuming the 90 days trading horizon MediaTek is expected to generate 1.33 times more return on investment than Lily Textile. However, MediaTek is 1.33 times more volatile than Lily Textile Co. It trades about -0.1 of its potential returns per unit of risk. Lily Textile Co is currently generating about -0.16 per unit of risk. If you would invest 133,500 in MediaTek on August 29, 2024 and sell it today you would lose (5,500) from holding MediaTek or give up 4.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
MediaTek vs. Lily Textile Co
Performance |
| Timeline |
| MediaTek |
| Lily Textile |
MediaTek and Lily Textile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MediaTek and Lily Textile
The main advantage of trading using opposite MediaTek and Lily Textile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MediaTek position performs unexpectedly, Lily Textile 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 Lily Textile will offset losses from the drop in Lily Textile's long position.| MediaTek vs. Hon Hai Precision | MediaTek vs. United Microelectronics | MediaTek vs. LARGAN Precision Co | MediaTek vs. Delta Electronics |
| Lily Textile vs. Yulon Finance Corp | Lily Textile vs. Taiwan Secom Co | Lily Textile vs. Pou Chen Corp | Lily Textile vs. Great Wall Enterprise |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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