Correlation Between MediaTek and Vate Technology
Can any of the company-specific risk be diversified away by investing in both MediaTek and Vate Technology 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 Vate Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MediaTek and Vate Technology Co, you can compare the effects of market volatilities on MediaTek and Vate Technology 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 Vate Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of MediaTek and Vate Technology.
Diversification Opportunities for MediaTek and Vate Technology
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between MediaTek and Vate is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding MediaTek and Vate Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vate Technology 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 Vate Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vate Technology has no effect on the direction of MediaTek i.e., MediaTek and Vate Technology go up and down completely randomly.
Pair Corralation between MediaTek and Vate Technology
Assuming the 90 days trading horizon MediaTek is expected to generate 0.56 times more return on investment than Vate Technology. However, MediaTek is 1.78 times less risky than Vate Technology. It trades about 0.18 of its potential returns per unit of risk. Vate Technology Co is currently generating about -0.01 per unit of risk. If you would invest 117,500 in MediaTek on September 29, 2024 and sell it today you would earn a total of 25,500 from holding MediaTek or generate 21.7% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
MediaTek vs. Vate Technology Co
Performance |
Timeline |
MediaTek |
Vate Technology |
MediaTek and Vate Technology Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with MediaTek and Vate Technology
The main advantage of trading using opposite MediaTek and Vate Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MediaTek position performs unexpectedly, Vate Technology 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 Vate Technology will offset losses from the drop in Vate Technology's long position.MediaTek vs. Hon Hai Precision | MediaTek vs. United Microelectronics | MediaTek vs. LARGAN Precision Co | MediaTek vs. Delta Electronics |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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