Correlation Between MediaTek and Vate Technology

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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 Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

MediaTek  vs.  Vate Technology Co

 Performance 
       Timeline  
MediaTek 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in MediaTek are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, MediaTek showed solid returns over the last few months and may actually be approaching a breakup point.
Vate Technology 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Insignificant
Over the last 90 days Vate Technology Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Vate Technology is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

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.
The idea behind MediaTek and Vate Technology Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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