Correlation Between MediaTek and Gudeng Precision
Can any of the company-specific risk be diversified away by investing in both MediaTek and Gudeng Precision 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 Gudeng Precision into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MediaTek and Gudeng Precision Industrial, you can compare the effects of market volatilities on MediaTek and Gudeng Precision 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 Gudeng Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of MediaTek and Gudeng Precision.
Diversification Opportunities for MediaTek and Gudeng Precision
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between MediaTek and Gudeng is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding MediaTek and Gudeng Precision Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gudeng Precision Ind 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 Gudeng Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gudeng Precision Ind has no effect on the direction of MediaTek i.e., MediaTek and Gudeng Precision go up and down completely randomly.
Pair Corralation between MediaTek and Gudeng Precision
Assuming the 90 days trading horizon MediaTek is expected to generate 0.95 times more return on investment than Gudeng Precision. However, MediaTek is 1.06 times less risky than Gudeng Precision. It trades about -0.07 of its potential returns per unit of risk. Gudeng Precision Industrial is currently generating about -0.18 per unit of risk. If you would invest 129,500 in MediaTek on September 3, 2024 and sell it today you would lose (4,000) from holding MediaTek or give up 3.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MediaTek vs. Gudeng Precision Industrial
Performance |
| Timeline |
| MediaTek |
| Gudeng Precision Ind |
MediaTek and Gudeng Precision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MediaTek and Gudeng Precision
The main advantage of trading using opposite MediaTek and Gudeng Precision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MediaTek position performs unexpectedly, Gudeng Precision 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 Gudeng Precision will offset losses from the drop in Gudeng Precision's long position.| MediaTek vs. Taiwan Semiconductor Manufacturing | MediaTek vs. Yang Ming Marine | MediaTek vs. ASE Industrial Holding | MediaTek vs. AU Optronics |
| Gudeng Precision vs. Taiwan Semiconductor Manufacturing | Gudeng Precision vs. Hon Hai Precision | Gudeng Precision vs. MediaTek | Gudeng Precision vs. Chunghwa Telecom Co |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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