Correlation Between MediaTek and Holtek Semiconductor

Can any of the company-specific risk be diversified away by investing in both MediaTek and Holtek Semiconductor 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 Holtek Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MediaTek and Holtek Semiconductor, you can compare the effects of market volatilities on MediaTek and Holtek Semiconductor 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 Holtek Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of MediaTek and Holtek Semiconductor.

Diversification Opportunities for MediaTek and Holtek Semiconductor

0.69

Correlation Coefficient

MediaTek  Holtek Semiconductor

Poor diversification

The 3 months correlation between MediaTek and Holtek is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding MediaTek and Holtek Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holtek Semiconductor 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 Holtek Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holtek Semiconductor has no effect on the direction of MediaTek i.e., MediaTek and Holtek Semiconductor go up and down completely randomly.

Pair Corralation between MediaTek and Holtek Semiconductor

Assuming the 90 days trading horizon MediaTek is expected to generate 0.84 times more return on investment than Holtek Semiconductor. However, MediaTek is 1.2 times less risky than Holtek Semiconductor. It trades about 0.17 of its potential returns per unit of risk. Holtek Semiconductor is currently generating about 0.04 per unit of risk. If you would invest  112,500  in MediaTek on September 13, 2024 and sell it today you would earn a total of  25,500  from holding MediaTek or generate 22.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

MediaTek  vs.  Holtek Semiconductor

MediaTek

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MediaTek are ranked lower than 13 (%) 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.

Holtek Semiconductor

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Holtek Semiconductor are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Holtek Semiconductor is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with MediaTek and Holtek Semiconductor

The main advantage of trading using opposite MediaTek and Holtek Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MediaTek position performs unexpectedly, Holtek Semiconductor 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 Holtek Semiconductor will offset losses from the drop in Holtek Semiconductor's long position.

The idea behind MediaTek and Holtek Semiconductor 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.

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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..