Correlation Between MediaTek and Lu Hai
Can any of the company-specific risk be diversified away by investing in both MediaTek and Lu Hai 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 Lu Hai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MediaTek and Lu Hai Holding, you can compare the effects of market volatilities on MediaTek and Lu Hai 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 Lu Hai. Check out your portfolio center. Please also check ongoing floating volatility patterns of MediaTek and Lu Hai.
Diversification Opportunities for MediaTek and Lu Hai
Poor diversification
The 3 months correlation between MediaTek and 2115 is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding MediaTek and Lu Hai Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lu Hai Holding 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 Lu Hai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lu Hai Holding has no effect on the direction of MediaTek i.e., MediaTek and Lu Hai go up and down completely randomly.
Pair Corralation between MediaTek and Lu Hai
Assuming the 90 days trading horizon MediaTek is expected to under-perform the Lu Hai. In addition to that, MediaTek is 1.85 times more volatile than Lu Hai Holding. It trades about -0.06 of its total potential returns per unit of risk. Lu Hai Holding is currently generating about -0.11 per unit of volatility. If you would invest 3,150 in Lu Hai Holding on August 31, 2024 and sell it today you would lose (75.00) from holding Lu Hai Holding or give up 2.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MediaTek vs. Lu Hai Holding
Performance |
| Timeline |
| MediaTek |
| Lu Hai Holding |
MediaTek and Lu Hai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MediaTek and Lu Hai
The main advantage of trading using opposite MediaTek and Lu Hai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MediaTek position performs unexpectedly, Lu Hai 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 Lu Hai will offset losses from the drop in Lu Hai's long position.| MediaTek vs. Hon Hai Precision | MediaTek vs. United Microelectronics | MediaTek vs. LARGAN Precision Co | MediaTek vs. Delta Electronics |
| Lu Hai vs. Chunghwa Chemical Synthesis | Lu Hai vs. Sanyang Motor Co | Lu Hai vs. Turvo International Co | Lu Hai vs. Iron Force Industrial |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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