Correlation Between MediaTek and China Mobile
Can any of the company-specific risk be diversified away by investing in both MediaTek and China Mobile 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 China Mobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MediaTek and China Mobile, you can compare the effects of market volatilities on MediaTek and China Mobile 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 China Mobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of MediaTek and China Mobile.
Diversification Opportunities for MediaTek and China Mobile
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between MediaTek and China is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding MediaTek and China Mobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Mobile 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 China Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Mobile has no effect on the direction of MediaTek i.e., MediaTek and China Mobile go up and down completely randomly.
Pair Corralation between MediaTek and China Mobile
Assuming the 90 days trading horizon MediaTek is expected to generate 1.89 times more return on investment than China Mobile. However, MediaTek is 1.89 times more volatile than China Mobile. It trades about 0.11 of its potential returns per unit of risk. China Mobile is currently generating about 0.02 per unit of risk. If you would invest 114,500 in MediaTek on September 6, 2024 and sell it today you would earn a total of 17,500 from holding MediaTek or generate 15.28% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
MediaTek vs. China Mobile
Performance |
Timeline |
MediaTek |
China Mobile |
MediaTek and China Mobile Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with MediaTek and China Mobile
The main advantage of trading using opposite MediaTek and China Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MediaTek position performs unexpectedly, China Mobile 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 China Mobile will offset losses from the drop in China Mobile's long position.MediaTek vs. Hon Hai Precision | MediaTek vs. United Microelectronics | MediaTek vs. LARGAN Precision Co | MediaTek vs. Delta Electronics |
China Mobile vs. Taiwan Semiconductor Manufacturing | China Mobile vs. Hon Hai Precision | China Mobile vs. MediaTek | China Mobile vs. Chunghwa Telecom 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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