Correlation Between MediaTek and Oriental Union
Can any of the company-specific risk be diversified away by investing in both MediaTek and Oriental Union 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 Oriental Union into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MediaTek and Oriental Union Chemical, you can compare the effects of market volatilities on MediaTek and Oriental Union 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 Oriental Union. Check out your portfolio center. Please also check ongoing floating volatility patterns of MediaTek and Oriental Union.
Diversification Opportunities for MediaTek and Oriental Union
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MediaTek and Oriental is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding MediaTek and Oriental Union Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oriental Union Chemical 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 Oriental Union. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oriental Union Chemical has no effect on the direction of MediaTek i.e., MediaTek and Oriental Union go up and down completely randomly.
Pair Corralation between MediaTek and Oriental Union
Assuming the 90 days trading horizon MediaTek is expected to generate 1.79 times more return on investment than Oriental Union. However, MediaTek is 1.79 times more volatile than Oriental Union Chemical. It trades about 0.06 of its potential returns per unit of risk. Oriental Union Chemical is currently generating about -0.01 per unit of risk. If you would invest 73,900 in MediaTek on August 24, 2024 and sell it today you would earn a total of 52,600 from holding MediaTek or generate 71.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MediaTek vs. Oriental Union Chemical
Performance |
| Timeline |
| MediaTek |
| Oriental Union Chemical |
MediaTek and Oriental Union Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MediaTek and Oriental Union
The main advantage of trading using opposite MediaTek and Oriental Union positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MediaTek position performs unexpectedly, Oriental Union 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 Oriental Union will offset losses from the drop in Oriental Union's long position.The idea behind MediaTek and Oriental Union Chemical 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.| Oriental Union vs. China Man Made Fiber | Oriental Union vs. Taiwan Styrene Monomer | Oriental Union vs. USI Corp | Oriental Union vs. China Petrochemical Development |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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