Correlation Between MediaTek and Fubon Financial
Can any of the company-specific risk be diversified away by investing in both MediaTek and Fubon Financial 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 Fubon Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MediaTek and Fubon Financial Holding, you can compare the effects of market volatilities on MediaTek and Fubon Financial 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 Fubon Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of MediaTek and Fubon Financial.
Diversification Opportunities for MediaTek and Fubon Financial
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MediaTek and Fubon is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding MediaTek and Fubon Financial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fubon Financial 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 Fubon Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fubon Financial Holding has no effect on the direction of MediaTek i.e., MediaTek and Fubon Financial go up and down completely randomly.
Pair Corralation between MediaTek and Fubon Financial
Assuming the 90 days trading horizon MediaTek is expected to generate 17.13 times more return on investment than Fubon Financial. However, MediaTek is 17.13 times more volatile than Fubon Financial Holding. It trades about 0.09 of its potential returns per unit of risk. Fubon Financial Holding is currently generating about 0.0 per unit of risk. If you would invest 141,000 in MediaTek on October 24, 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 Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MediaTek vs. Fubon Financial Holding
Performance |
| Timeline |
| MediaTek |
| Fubon Financial Holding |
MediaTek and Fubon Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MediaTek and Fubon Financial
The main advantage of trading using opposite MediaTek and Fubon Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MediaTek position performs unexpectedly, Fubon Financial 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 Fubon Financial will offset losses from the drop in Fubon Financial's long position.| MediaTek vs. Hon Hai Precision | MediaTek vs. United Microelectronics | MediaTek vs. LARGAN Precision Co | MediaTek vs. Delta Electronics |
| Fubon Financial vs. Holiday Entertainment Co | Fubon Financial vs. MediaTek | Fubon Financial vs. Pili International Multimedia | Fubon Financial vs. U Media Communications |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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