Correlation Between MediaTek and Icares Medicus
Can any of the company-specific risk be diversified away by investing in both MediaTek and Icares Medicus 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 Icares Medicus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MediaTek and Icares Medicus, you can compare the effects of market volatilities on MediaTek and Icares Medicus 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 Icares Medicus. Check out your portfolio center. Please also check ongoing floating volatility patterns of MediaTek and Icares Medicus.
Diversification Opportunities for MediaTek and Icares Medicus
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between MediaTek and Icares is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding MediaTek and Icares Medicus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icares Medicus 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 Icares Medicus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icares Medicus has no effect on the direction of MediaTek i.e., MediaTek and Icares Medicus go up and down completely randomly.
Pair Corralation between MediaTek and Icares Medicus
Assuming the 90 days trading horizon MediaTek is expected to generate 0.79 times more return on investment than Icares Medicus. However, MediaTek is 1.26 times less risky than Icares Medicus. It trades about 0.06 of its potential returns per unit of risk. Icares Medicus is currently generating about 0.04 per unit of risk. If you would invest 73,900 in MediaTek on August 26, 2024 and sell it today you would earn a total of 57,100 from holding MediaTek or generate 77.27% 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. Icares Medicus
Performance |
| Timeline |
| MediaTek |
| Icares Medicus |
MediaTek and Icares Medicus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MediaTek and Icares Medicus
The main advantage of trading using opposite MediaTek and Icares Medicus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MediaTek position performs unexpectedly, Icares Medicus 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 Icares Medicus will offset losses from the drop in Icares Medicus' long position.| MediaTek vs. Novatek Microelectronics Corp | MediaTek vs. Quanta Computer | MediaTek vs. United Microelectronics |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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