Correlation Between MediaTek and Ibase Gaming

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

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

Diversification Opportunities for MediaTek and Ibase Gaming

-0.43

Correlation Coefficient

MediaTek  Ibase Gaming

Very good diversification

The 3 months correlation between MediaTek and Ibase is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding MediaTek and Ibase Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ibase Gaming 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 Ibase Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ibase Gaming has no effect on the direction of MediaTek i.e., MediaTek and Ibase Gaming go up and down completely randomly.

Pair Corralation between MediaTek and Ibase Gaming

Assuming the 90 days trading horizon MediaTek is expected to generate 0.98 times more return on investment than Ibase Gaming. However, MediaTek is 1.02 times less risky than Ibase Gaming. It trades about 0.15 of its potential returns per unit of risk. Ibase Gaming is currently generating about -0.11 per unit of risk. If you would invest  114,500  in MediaTek on September 23, 2024 and sell it today you would earn a total of  24,500  from holding MediaTek or generate 21.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

MediaTek  vs.  Ibase Gaming

MediaTek

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MediaTek are ranked lower than 11 (%) 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.

Ibase Gaming

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ibase Gaming has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with MediaTek and Ibase Gaming

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

The idea behind MediaTek and Ibase Gaming 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.