Correlation Between MediaTek and C Media
Can any of the company-specific risk be diversified away by investing in both MediaTek and C Media 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 C Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MediaTek and C Media Electronics, you can compare the effects of market volatilities on MediaTek and C Media 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 C Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of MediaTek and C Media.
Diversification Opportunities for MediaTek and C Media
Poor diversification
The 3 months correlation between MediaTek and 6237 is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding MediaTek and C Media Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on C Media Electronics 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 C Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of C Media Electronics has no effect on the direction of MediaTek i.e., MediaTek and C Media go up and down completely randomly.
Pair Corralation between MediaTek and C Media
Assuming the 90 days trading horizon MediaTek is expected to generate 0.82 times more return on investment than C Media. However, MediaTek is 1.22 times less risky than C Media. It trades about 0.09 of its potential returns per unit of risk. C Media Electronics is currently generating about -0.1 per unit of risk. If you would invest 117,500 in MediaTek on August 30, 2024 and sell it today you would earn a total of 7,500 from holding MediaTek or generate 6.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MediaTek vs. C Media Electronics
Performance |
| Timeline |
| MediaTek |
| C Media Electronics |
MediaTek and C Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MediaTek and C Media
The main advantage of trading using opposite MediaTek and C Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MediaTek position performs unexpectedly, C Media 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 C Media will offset losses from the drop in C Media's long position.| MediaTek vs. Hon Hai Precision | MediaTek vs. United Microelectronics | MediaTek vs. LARGAN Precision Co | MediaTek vs. Delta Electronics |
| C Media vs. Taiwan Semiconductor Manufacturing | C Media vs. MediaTek | C Media vs. United Microelectronics | C Media vs. Novatek Microelectronics 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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