Correlation Between MediaTek and Tung Ho
Can any of the company-specific risk be diversified away by investing in both MediaTek and Tung Ho 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 Tung Ho into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MediaTek and Tung Ho Steel, you can compare the effects of market volatilities on MediaTek and Tung Ho 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 Tung Ho. Check out your portfolio center. Please also check ongoing floating volatility patterns of MediaTek and Tung Ho.
Diversification Opportunities for MediaTek and Tung Ho
Very good diversification
The 3 months correlation between MediaTek and Tung is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding MediaTek and Tung Ho Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tung Ho Steel 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 Tung Ho. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tung Ho Steel has no effect on the direction of MediaTek i.e., MediaTek and Tung Ho go up and down completely randomly.
Pair Corralation between MediaTek and Tung Ho
Assuming the 90 days trading horizon MediaTek is expected to generate 1.95 times more return on investment than Tung Ho. However, MediaTek is 1.95 times more volatile than Tung Ho Steel. It trades about 0.07 of its potential returns per unit of risk. Tung Ho Steel is currently generating about 0.05 per unit of risk. If you would invest 76,800 in MediaTek on August 31, 2024 and sell it today you would earn a total of 48,700 from holding MediaTek or generate 63.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
MediaTek vs. Tung Ho Steel
Performance |
| Timeline |
| MediaTek |
| Tung Ho Steel |
MediaTek and Tung Ho Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MediaTek and Tung Ho
The main advantage of trading using opposite MediaTek and Tung Ho positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MediaTek position performs unexpectedly, Tung Ho 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 Tung Ho will offset losses from the drop in Tung Ho's long position.| MediaTek vs. Hon Hai Precision | MediaTek vs. United Microelectronics | MediaTek vs. LARGAN Precision Co | MediaTek vs. Delta Electronics |
| Tung Ho vs. Basso Industry Corp | Tung Ho vs. Chung Hsin Electric Machinery | Tung Ho vs. TYC Brother Industrial | Tung Ho vs. TECO Electric Machinery |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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