Correlation Between MediaTek and Central Reinsurance
Can any of the company-specific risk be diversified away by investing in both MediaTek and Central Reinsurance 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 Central Reinsurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MediaTek and Central Reinsurance Corp, you can compare the effects of market volatilities on MediaTek and Central Reinsurance 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 Central Reinsurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of MediaTek and Central Reinsurance.
Diversification Opportunities for MediaTek and Central Reinsurance
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between MediaTek and Central is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding MediaTek and Central Reinsurance Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Reinsurance Corp 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 Central Reinsurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Reinsurance Corp has no effect on the direction of MediaTek i.e., MediaTek and Central Reinsurance go up and down completely randomly.
Pair Corralation between MediaTek and Central Reinsurance
Assuming the 90 days trading horizon MediaTek is expected to generate 2.27 times more return on investment than Central Reinsurance. However, MediaTek is 2.27 times more volatile than Central Reinsurance Corp. It trades about 0.24 of its potential returns per unit of risk. Central Reinsurance Corp is currently generating about 0.0 per unit of risk. If you would invest 126,500 in MediaTek on September 22, 2024 and sell it today you would earn a total of 12,500 from holding MediaTek or generate 9.88% 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. Central Reinsurance Corp
Performance |
| Timeline |
| MediaTek |
| Central Reinsurance Corp |
MediaTek and Central Reinsurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MediaTek and Central Reinsurance
The main advantage of trading using opposite MediaTek and Central Reinsurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MediaTek position performs unexpectedly, Central Reinsurance 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 Central Reinsurance will offset losses from the drop in Central Reinsurance's long position.| MediaTek vs. Century Wind Power | MediaTek vs. Green World Fintech | MediaTek vs. Ingentec | MediaTek vs. Chaheng Precision Co |
| Central Reinsurance vs. LARGAN Precision Co | Central Reinsurance vs. Evergreen Marine Corp | Central Reinsurance vs. MediaTek | Central Reinsurance vs. Wiwynn Corp |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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