Correlation Between Innolux Corp and MediaTek
Can any of the company-specific risk be diversified away by investing in both Innolux Corp and MediaTek 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 Innolux Corp and MediaTek into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innolux Corp and MediaTek, you can compare the effects of market volatilities on Innolux Corp and MediaTek 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 Innolux Corp with a short position of MediaTek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innolux Corp and MediaTek.
Diversification Opportunities for Innolux Corp and MediaTek
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Innolux and MediaTek is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Innolux Corp and MediaTek in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MediaTek and Innolux Corp 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 Innolux Corp are associated (or correlated) with MediaTek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MediaTek has no effect on the direction of Innolux Corp i.e., Innolux Corp and MediaTek go up and down completely randomly.
Pair Corralation between Innolux Corp and MediaTek
Assuming the 90 days trading horizon Innolux Corp is expected to generate 5.83 times less return on investment than MediaTek. But when comparing it to its historical volatility, Innolux Corp is 1.36 times less risky than MediaTek. It trades about 0.04 of its potential returns per unit of risk. MediaTek is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 126,500 in MediaTek on September 13, 2024 and sell it today you would earn a total of 8,500 from holding MediaTek or generate 6.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innolux Corp vs. MediaTek
Performance |
| Timeline |
| Innolux Corp |
| MediaTek |
Innolux Corp and MediaTek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innolux Corp and MediaTek
The main advantage of trading using opposite Innolux Corp and MediaTek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innolux Corp position performs unexpectedly, MediaTek 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 MediaTek will offset losses from the drop in MediaTek's long position.| Innolux Corp vs. AU Optronics | Innolux Corp vs. Ruentex Development Co | Innolux Corp vs. WiseChip Semiconductor | Innolux Corp vs. Novatek Microelectronics Corp |
| MediaTek vs. AU Optronics | MediaTek vs. Innolux Corp | MediaTek vs. Ruentex Development Co | MediaTek vs. WiseChip Semiconductor |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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