Correlation Between MediaTek and Chernan Metal
Can any of the company-specific risk be diversified away by investing in both MediaTek and Chernan Metal 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 Chernan Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MediaTek and Chernan Metal Industrial, you can compare the effects of market volatilities on MediaTek and Chernan Metal 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 Chernan Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of MediaTek and Chernan Metal.
Diversification Opportunities for MediaTek and Chernan Metal
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between MediaTek and Chernan is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding MediaTek and Chernan Metal Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chernan Metal Industrial 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 Chernan Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chernan Metal Industrial has no effect on the direction of MediaTek i.e., MediaTek and Chernan Metal go up and down completely randomly.
Pair Corralation between MediaTek and Chernan Metal
Assuming the 90 days trading horizon MediaTek is expected to generate 1.02 times more return on investment than Chernan Metal. However, MediaTek is 1.02 times more volatile than Chernan Metal Industrial. It trades about 0.06 of its potential returns per unit of risk. Chernan Metal Industrial is currently generating about 0.06 per unit of risk. If you would invest 94,300 in MediaTek on September 3, 2024 and sell it today you would earn a total of 36,700 from holding MediaTek or generate 38.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MediaTek vs. Chernan Metal Industrial
Performance |
| Timeline |
| MediaTek |
| Chernan Metal Industrial |
MediaTek and Chernan Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MediaTek and Chernan Metal
The main advantage of trading using opposite MediaTek and Chernan Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MediaTek position performs unexpectedly, Chernan Metal 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 Chernan Metal will offset losses from the drop in Chernan Metal's long position.| MediaTek vs. Taiwan Semiconductor Manufacturing | MediaTek vs. Yang Ming Marine | MediaTek vs. ASE Industrial Holding | MediaTek vs. AU Optronics |
| Chernan Metal vs. Catcher Technology Co | Chernan Metal vs. Evergreen Steel Corp | Chernan Metal vs. China Metal Products |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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