Correlation Between MediaTek and Kinpo Electronics
Can any of the company-specific risk be diversified away by investing in both MediaTek and Kinpo Electronics 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 Kinpo Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MediaTek and Kinpo Electronics, you can compare the effects of market volatilities on MediaTek and Kinpo Electronics 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 Kinpo Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of MediaTek and Kinpo Electronics.
Diversification Opportunities for MediaTek and Kinpo Electronics
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between MediaTek and Kinpo is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding MediaTek and Kinpo Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinpo Electronics 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 Kinpo Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinpo Electronics has no effect on the direction of MediaTek i.e., MediaTek and Kinpo Electronics go up and down completely randomly.
Pair Corralation between MediaTek and Kinpo Electronics
Assuming the 90 days trading horizon MediaTek is expected to generate 1.45 times more return on investment than Kinpo Electronics. However, MediaTek is 1.45 times more volatile than Kinpo Electronics. It trades about 0.09 of its potential returns per unit of risk. Kinpo Electronics is currently generating about -0.23 per unit of risk. If you would invest 141,000 in MediaTek on October 26, 2024 and sell it today you would earn a total of 5,500 from holding MediaTek or generate 3.9% 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. Kinpo Electronics
Performance |
| Timeline |
| MediaTek |
| Kinpo Electronics |
MediaTek and Kinpo Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MediaTek and Kinpo Electronics
The main advantage of trading using opposite MediaTek and Kinpo Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MediaTek position performs unexpectedly, Kinpo Electronics 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 Kinpo Electronics will offset losses from the drop in Kinpo Electronics' long position.| MediaTek vs. Hon Hai Precision | MediaTek vs. United Microelectronics | MediaTek vs. LARGAN Precision Co | MediaTek vs. Delta Electronics |
| Kinpo Electronics vs. Compal Electronics | Kinpo Electronics vs. Inventec Corp | Kinpo Electronics vs. D Link Corp | Kinpo Electronics vs. Silicon Integrated Systems |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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