Correlation Between MediaTek and Leatec Fine
Can any of the company-specific risk be diversified away by investing in both MediaTek and Leatec Fine 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 Leatec Fine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MediaTek and Leatec Fine Ceramics, you can compare the effects of market volatilities on MediaTek and Leatec Fine 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 Leatec Fine. Check out your portfolio center. Please also check ongoing floating volatility patterns of MediaTek and Leatec Fine.
Diversification Opportunities for MediaTek and Leatec Fine
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MediaTek and Leatec is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding MediaTek and Leatec Fine Ceramics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leatec Fine Ceramics 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 Leatec Fine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leatec Fine Ceramics has no effect on the direction of MediaTek i.e., MediaTek and Leatec Fine go up and down completely randomly.
Pair Corralation between MediaTek and Leatec Fine
Assuming the 90 days trading horizon MediaTek is expected to generate 0.91 times more return on investment than Leatec Fine. However, MediaTek is 1.1 times less risky than Leatec Fine. It trades about 0.05 of its potential returns per unit of risk. Leatec Fine Ceramics is currently generating about 0.0 per unit of risk. If you would invest 120,000 in MediaTek on November 7, 2024 and sell it today you would earn a total of 29,000 from holding MediaTek or generate 24.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MediaTek vs. Leatec Fine Ceramics
Performance |
| Timeline |
| MediaTek |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
| Leatec Fine Ceramics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
MediaTek and Leatec Fine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MediaTek and Leatec Fine
The main advantage of trading using opposite MediaTek and Leatec Fine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MediaTek position performs unexpectedly, Leatec Fine 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 Leatec Fine will offset losses from the drop in Leatec Fine's long position.The idea behind MediaTek and Leatec Fine Ceramics pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
Other Complementary Tools
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital |