Correlation Between MediaTek and AU Optronics
Can any of the company-specific risk be diversified away by investing in both MediaTek and AU Optronics 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 AU Optronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MediaTek and AU Optronics, you can compare the effects of market volatilities on MediaTek and AU Optronics 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 AU Optronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of MediaTek and AU Optronics.
Diversification Opportunities for MediaTek and AU Optronics
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between MediaTek and 2409 is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding MediaTek and AU Optronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AU Optronics 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 AU Optronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AU Optronics has no effect on the direction of MediaTek i.e., MediaTek and AU Optronics go up and down completely randomly.
Pair Corralation between MediaTek and AU Optronics
Assuming the 90 days trading horizon MediaTek is expected to generate 1.24 times more return on investment than AU Optronics. However, MediaTek is 1.24 times more volatile than AU Optronics. It trades about 0.06 of its potential returns per unit of risk. AU Optronics is currently generating about 0.01 per unit of risk. If you would invest 73,900 in MediaTek on August 26, 2024 and sell it today you would earn a total of 57,100 from holding MediaTek or generate 77.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MediaTek vs. AU Optronics
Performance |
| Timeline |
| MediaTek |
| AU Optronics |
MediaTek and AU Optronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MediaTek and AU Optronics
The main advantage of trading using opposite MediaTek and AU Optronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MediaTek position performs unexpectedly, AU Optronics 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 AU Optronics will offset losses from the drop in AU Optronics' long position.| MediaTek vs. Novatek Microelectronics Corp | MediaTek vs. Quanta Computer | MediaTek vs. United Microelectronics |
| AU Optronics vs. Novatek Microelectronics Corp | AU Optronics vs. Quanta Computer | AU Optronics vs. United Microelectronics |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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