Correlation Between MediaTek and Acer
Can any of the company-specific risk be diversified away by investing in both MediaTek and Acer 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 Acer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MediaTek and Acer Inc, you can compare the effects of market volatilities on MediaTek and Acer 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 Acer. Check out your portfolio center. Please also check ongoing floating volatility patterns of MediaTek and Acer.
Diversification Opportunities for MediaTek and Acer
Very good diversification
The 3 months correlation between MediaTek and Acer is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding MediaTek and Acer Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acer Inc 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 Acer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acer Inc has no effect on the direction of MediaTek i.e., MediaTek and Acer go up and down completely randomly.
Pair Corralation between MediaTek and Acer
Assuming the 90 days trading horizon MediaTek is expected to generate 1.48 times more return on investment than Acer. However, MediaTek is 1.48 times more volatile than Acer Inc. It trades about 0.02 of its potential returns per unit of risk. Acer Inc is currently generating about -0.13 per unit of risk. If you would invest 123,500 in MediaTek on August 29, 2024 and sell it today you would earn a total of 1,500 from holding MediaTek or generate 1.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MediaTek vs. Acer Inc
Performance |
| Timeline |
| MediaTek |
| Acer Inc |
MediaTek and Acer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MediaTek and Acer
The main advantage of trading using opposite MediaTek and Acer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MediaTek position performs unexpectedly, Acer 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 Acer will offset losses from the drop in Acer's long position.| MediaTek vs. Hon Hai Precision | MediaTek vs. United Microelectronics | MediaTek vs. LARGAN Precision Co | MediaTek vs. Delta Electronics |
| Acer vs. Sitronix Technology Corp | Acer vs. Elan Microelectronics Corp | Acer vs. Global Unichip Corp | Acer vs. Holtek Semiconductor |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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