Correlation Between MediaTek and I Hwa
Can any of the company-specific risk be diversified away by investing in both MediaTek and I Hwa 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 I Hwa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MediaTek and I Hwa Industrial Co, you can compare the effects of market volatilities on MediaTek and I Hwa 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 I Hwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of MediaTek and I Hwa.
Diversification Opportunities for MediaTek and I Hwa
Very good diversification
The 3 months correlation between MediaTek and 1456 is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding MediaTek and I Hwa Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on I Hwa Industrial 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 I Hwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of I Hwa Industrial has no effect on the direction of MediaTek i.e., MediaTek and I Hwa go up and down completely randomly.
Pair Corralation between MediaTek and I Hwa
Assuming the 90 days trading horizon MediaTek is expected to generate 0.69 times more return on investment than I Hwa. However, MediaTek is 1.45 times less risky than I Hwa. It trades about -0.06 of its potential returns per unit of risk. I Hwa Industrial Co is currently generating about -0.13 per unit of risk. If you would invest 129,000 in MediaTek on September 1, 2024 and sell it today you would lose (3,500) from holding MediaTek or give up 2.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MediaTek vs. I Hwa Industrial Co
Performance |
| Timeline |
| MediaTek |
| I Hwa Industrial |
MediaTek and I Hwa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MediaTek and I Hwa
The main advantage of trading using opposite MediaTek and I Hwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MediaTek position performs unexpectedly, I Hwa 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 I Hwa will offset losses from the drop in I Hwa's long position.| MediaTek vs. Hon Hai Precision | MediaTek vs. United Microelectronics | MediaTek vs. LARGAN Precision Co | MediaTek vs. Delta Electronics |
| I Hwa vs. Chaintech Technology Corp | I Hwa vs. AVerMedia Technologies | I Hwa vs. Avision | I Hwa vs. Clevo Co |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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