Correlation Between Chaheng Precision and MediaTek
Can any of the company-specific risk be diversified away by investing in both Chaheng Precision 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 Chaheng Precision and MediaTek into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chaheng Precision Co and MediaTek, you can compare the effects of market volatilities on Chaheng Precision 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 Chaheng Precision with a short position of MediaTek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chaheng Precision and MediaTek.
Diversification Opportunities for Chaheng Precision and MediaTek
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chaheng and MediaTek is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Chaheng Precision Co and MediaTek in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MediaTek and Chaheng Precision 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 Chaheng Precision Co 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 Chaheng Precision i.e., Chaheng Precision and MediaTek go up and down completely randomly.
Pair Corralation between Chaheng Precision and MediaTek
Assuming the 90 days trading horizon Chaheng Precision Co is expected to under-perform the MediaTek. But the stock apears to be less risky and, when comparing its historical volatility, Chaheng Precision Co is 1.29 times less risky than MediaTek. The stock trades about -0.13 of its potential returns per unit of risk. The MediaTek is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 131,000 in MediaTek on October 1, 2024 and sell it today you would earn a total of 12,000 from holding MediaTek or generate 9.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chaheng Precision Co vs. MediaTek
Performance |
| Timeline |
| Chaheng Precision |
| MediaTek |
Chaheng Precision and MediaTek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chaheng Precision and MediaTek
The main advantage of trading using opposite Chaheng Precision and MediaTek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chaheng Precision 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.| Chaheng Precision vs. CSBC Corp Taiwan | Chaheng Precision vs. Eva Airways Corp | Chaheng Precision vs. Taiwan High Speed | Chaheng Precision vs. China Airlines |
| MediaTek vs. Century Wind Power | MediaTek vs. Green World Fintech | MediaTek vs. Ingentec | MediaTek vs. Chaheng Precision 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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