Correlation Between MediaTek and Ruentex Industries
Can any of the company-specific risk be diversified away by investing in both MediaTek and Ruentex Industries 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 Ruentex Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MediaTek and Ruentex Industries, you can compare the effects of market volatilities on MediaTek and Ruentex Industries 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 Ruentex Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of MediaTek and Ruentex Industries.
Diversification Opportunities for MediaTek and Ruentex Industries
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between MediaTek and Ruentex is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding MediaTek and Ruentex Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ruentex Industries 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 Ruentex Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ruentex Industries has no effect on the direction of MediaTek i.e., MediaTek and Ruentex Industries go up and down completely randomly.
Pair Corralation between MediaTek and Ruentex Industries
Assuming the 90 days trading horizon MediaTek is expected to generate 1.83 times more return on investment than Ruentex Industries. However, MediaTek is 1.83 times more volatile than Ruentex Industries. It trades about 0.17 of its potential returns per unit of risk. Ruentex Industries is currently generating about -0.32 per unit of risk. If you would invest 128,000 in MediaTek on October 26, 2024 and sell it today you would earn a total of 18,500 from holding MediaTek or generate 14.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MediaTek vs. Ruentex Industries
Performance |
| Timeline |
| MediaTek |
| Ruentex Industries |
MediaTek and Ruentex Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MediaTek and Ruentex Industries
The main advantage of trading using opposite MediaTek and Ruentex Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MediaTek position performs unexpectedly, Ruentex Industries 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 Ruentex Industries will offset losses from the drop in Ruentex Industries' long position.| MediaTek vs. Hon Hai Precision | MediaTek vs. United Microelectronics | MediaTek vs. LARGAN Precision Co | MediaTek vs. Delta Electronics |
| Ruentex Industries vs. Ruentex Development Co | Ruentex Industries vs. Fubon Financial Holding | Ruentex Industries vs. Cathay Financial Holding | Ruentex Industries vs. Pou Chen 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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